Question

Q. An investment management agreement between a firm and a client is most likely an:

1. ad hoc document.
2. internal document.
3. external document.

Q. A convertible bond:

1. is a hybrid security.
2. usually trades below its conversion value.
3. typically gives the issuer the right to convert it into a pre-specified number of shares.

Q. The CFA Institute Code of Ethics stipulates that members must:

1. concentrate on the integrity and viability of domestic capital markets over international markets.
2. maintain and improve their professional competence as well as that of other investment professionals.
3. reference consensus opinions whenever researching an investment option or acting on an investment decision.

Q. Which of the following is a need served by participants within the investment industry?

1. Custodial services
2. Monetary policy actions
3. Regulation enforcement

Q. The party that settles trades after the trades have been arranged is known as the:

1. auditor.
2. fund manager.
3. clearing house.

Q. A vehicle in which investment professionals promise to implement a specific active strategy in exchange for a single flat fee is known as:

1. an index fund.
2. a hedge fund.
3. a managed account.

Q. The underlying asset of a derivative contract can be a:

1. real asset only.
2. financial asset only.
3. real or financial asset.

Answer 1

Answer:- External document

(Explanation:- External documentation exists between a company and external parties, including clients, market participants, and service providers. So, An investment management agreement between a firm and a client is most likely an external document.)

Answer:- is a hybrid security

(Explanation:- A convertible bond is the most common type of hybrid security, that has features of an ordinary bond but is also influenced by the price movements of the stock into which it converts.)

Answer:- maintain and improve their professional competence as well as that of other investment professionals.

(Explanation:- The CFA Institute Code of Ethics stipulates that members must maintain and improve their professional competence as well as that of other investment professionals.)

Answer:- Custodial services

(Explanation:- The need served by participants within the investment industry is Custodial services. Custodians actually hold money and securities on behalf of their clients.)

Answer:- Clearing house

(Explanation:- Clearing house performs the procedure by which financial trades settle  after the trades have been arranged i.e. the correct and timely transfer of funds and securities to the concerned parties.)

Answer:- a managed account.

(Explanation:- Money managers of a managed account often demand huge amount of investments to manage accounts and are compensated by a fee, which is a set percentage of assets under management.)

Answer:- real or financial asset.

(Explanation:- The underlying asset in case of derivatives can be a real asset, such as wheat or gold, or a financial asset, such as the share of a company.)