Question

Question 8

Which of the following is true of long-term care insurance?

	a.	The maximum duration of benefits is only one year.
	b.	There is no waiting period to receive the benefits.
	c.	Most long-term-care insurance policies are non-renewable in nature.
	d.	Many policies offer inflation protection riders for an additional premium.
	e.	Long-term-care policies do not reimburse the insured for the cost of services incurred on a day-to-day basis.

Question 9

A bear market condition is associated with:

	a.	high returns.
	b.	increased tax rate.
	c.	declining securities prices.
	d.	investor optimism.
	e.	economic recovery.

Question 10

A bull market is characterized by:

	a.	low returns.
	b.	investor optimism.
	c.	falling stock prices.
	d.	economic slowdown.
	e.	investor pessimism.

Question 11

A diversified portfolio of securities is characterized by:

	a.	unstable earnings for the entire investment horizon.
	b.	investing on a single security which has the lowest risk and the highest returns.
	c.	concentration on a single industry which has the highest growth rate.
	d.	dissimilar risk-return characteristics of the financial instruments.
	e.	erratic loss potential due to investment in latest financial vehicles.

Question 12

Clara’s portfolio is worth $200,000 and her portfolio consists of common stocks worth $56,000. Therefore, equity constitutes _____ of Clara’s portfolio.

	a.	28%
	b.	61%
	c.	56%
	d.	10%
	e.	33%

Question 13

Mathew had purchased 100 shares of Blue Corporation for $100 per share. Currently, the stocks of Blue Corporation are trading at $150. Which of the following is the return on Mathew’s investment on one share?

	a.	40%
	b.	80%
	c.	65%
	d.	75%
	e.	50%

Question 14

Mike is in his late 60’s and retired. He wants to maintain a portfolio of investments that will provide him a stable income. Which of the following financial instruments is the most suitable option for Mike?

	a.	Money market securities
	b.	Loans
	c.	Stocks
	d.	Bonds
	e.	Mortgages

Question 15

The first thing you need to determine in order to reach an investment goal after accumulating the capital is the __________.

	a.	rate of inflation
	b.	rate of consumption
	c.	rate of savings
	d.	rate of return

Question 16

The most important investment prerequisites are:

	a.	adequate insurance and liquidity.
	b.	inconsistency and risk awareness.
	c.	adequate income and unpublished information.
	d.	adequate income and debt.
	e.	an investment plan and a non-monetary goal.

Answer 1

8.

In case of long-term care insurance, insurance coverage is provided for a long term. In the long term, prices of goods and services generally tend to increase. Hence, in many long term insurance policies, inflation riders are provided. Hence, the correct statement is many policies offer inflation protection riders for an additional premium.

Correct option is (d)

9.

A bear market is a market in which investors expect that prices of securities will decrease in future and hence they start selling their securities and withdraw funds from the market. Hence, a bear market condition is associated with: declining securities prices.

Correct option is (c)

10.

A bull market is a market in which investors expect that prices of securities will increase in future and hence they buy more and more securities in anticipation of earning abnormal incomes. Hence, a bull market is characterized by: investor optimism.

Correct option is (b)

11.

A diversified portfolio is a portfolio in which investment is made in different securities of different risk and return class so that overall risk can be minimized. Hence, A diversified portfolio of securities is characterized by: dissimilar risk-return characteristics of the financial instruments.

Correct option is (d)

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