Investment Management Techniques (IMT) Practice Questions And Answers

Qualifying public charities include: churches and educational organizations; hospitals and medical research organizations; government entities; and publicly supported organizations that receive a substantial amount of support from the general public or government (like the Red Cross).

Standard deviation is the measure of the variability of returns of an asset compared with the mean or expected value of that asset. It is a measure of total risk: the larger the dispersion around some mean value, the greater the risk and the larger the standard deviation.

Standard deviation is the measure of the variability of returns of an asset compared with the mean or expected value of that asset. It is a measure of total risk: the larger the dispersion around some mean value, the greater the risk and the larger the standard deviation.

Contrarians are those that assert that investors should do the opposite of the general investor, as the general investor is wrong most of the time. Contrarians will make use of mutual fund cash positions, the investor credit balances in brokerage accounts, investment advisory opinion, and OTC vs. NYSE volume, whereas smart money traders will make use of the Confidence Index, T-bill yields, Eurodollar rates, short sales by specialists, and the margin debit balances in brokerage accounts.

Contrarians will make use of mutual fund cash positions, the investor credit balances in brokerage accounts, investment advisory opinion, and OTC vs. NYSE volume, whereas smart money traders will make use of the Confidence Index, T-bill yields, Eurodollar rates, short sales by specialists, and the margin debit balances in brokerage accounts.

Asset allocation programs are usually marketed in one of five ways: aggressive growth, growth, growth and income, balanced, and fixed income; these are listed above in descending order of return and risk level.

These five companies provide the best ratings of financial strength: A.M. Best; Fitch; Moody’s; Standard and Poor’s; and Weiss.

These five companies provide the best ratings of financial strength: A.M. Best; Fitch; Moody’s; Standard and Poor’s; and Weiss. These ratings are typically based on underwriting results, economy of management, adequacy of reserves for undischarged liabilities, adequacy of policyholder’s surplus to absorb shocks, and the soundness of investments.

The maturities on these tend to be up to one year; for the most part, certificates of deposit of less than $100,000 are nonnegotiable.

Covariance, meanwhile, is the degree to which any two variables move together over time. If the two variables move together, they have a positive covariance; if they move apart, they have a negative covariance.

A correlation coefficient of +1 indicates that returns move in the same direction and are perfectly positively correlated; a correlation coefficient of -1 means the returns move oppositely, and are perfectly negatively correlated; a correlation coefficient of zero indicates two uncorrelated returns.

In the first section, Coverage A insures the house and anything attached to it; Coverage B insures any other structures on the property; Coverage C insures the personal property of the owner at actual cash value; Coverage D pays for any loss of use; Coverage E insures against personal liability; and Coverage F insures for any medical payments that need to be paid to other people.

A personal auto policy (PAP) is a package insurance policy that provides both property and liability insurance for the members of a family. A PAP offers four kinds of insurance.

Key employee insurance is insurance taken out on a certain valuable employee. This insurance is owned by the business, which is also considered the beneficiary. The premiums in a policy of this type are not deductible to the business. Death benefits acquired through a policy of this type are tax-free. Generally, key employee insurance is taken out in order to protect the business against the loss of business income and also to ensure that funds will be available to find and train a replacement for the key employee.

The purpose of insurance is threefold: to protect existing assets; to protect income, so that it will not be interrupted by loss; and to protect both income and assets in the case of liabilities or emergency needs.

The Producer Price Index, known as the PPI, is calculated by the United States Department of Labor. It takes a slightly different look at the price of goods by measuring the wholesale cost of a certain set of goods over a determined period of time.

The Consumer Price Index is calculated using statistics from the Bureau of Labor. This index, commonly known as the CPI, measures the cost of a basket of goods and services over a set time period.

In order for a valid contract to exist, there must be five elements: offer and acceptance, genuine assent, adequate consideration, capacity, and legality.

Budget expenses can be either discretionary or nondiscretionary: discretionary expenses can be changed or timed depending on convenience. Nondiscretionary (fixed) expenses can be changed somewhat, but must be paid at some time.

People can use a number of financing strategies in personal budgeting. One common strategy is to consolidate credit card or student loan debt, so as to lock in a low interest rate. A person may also take a cash-out refinance, in which a first mortgage is renewed and additional cash is disbursed to the mortgager. People also often take out a home equity loan or home equity line of credit. Sometimes, an individual will use the cash value of a life insurance policy for a loan. Another common financing strategy is tapping into a company savings plan. Finally, individuals often use the after-tax money from a Roth IRA; this money can be taken out without any penalty or tax consequences.