Question 1

How do mutual funds compare to other investment options regarding liquidity?

Options :

A : Mutual funds offer limited liquidity due to redemption restrictions.

B : Mutual funds lack liquidity as they require a lengthy redemption process.

C : Mutual funds grant shareholders the right to redeem shares for cash within two business days.

D : Mutual funds provide immediate liquidity with same-day redemption.

Answer: C

Question 2

A growth manager is evaluating two stocks: Stock X, with high EPS growth but currently overpriced, and Stock Y, with moderate EPS growth and a lower price. Which stock is the growth manager likely to favor?

Options :

A : Stock Y, because of its lower price.

B : Neither, because both are overpriced according to market standards.

C : Stock X, because of its high EPS growth potential.

D : Both stocks equally, as they have similar growth potential.

Answer: C

Question 3

Emily is considering contributing to her Registered Pension Plan (RPP). If Emily's Pension Adjustment (PA) for the year is $5,000 and she has a Past Service Pension Adjustment (PSPA) of $1,200, what is the maximum amount she can contribute to her RRSP for the year Assuming her annual RRSP limit is $9,000?

Options :

A : $4,000.

B : $14,000.

C : $2,800.

D : $7,800.

Answer: C

Question 4

Anna is a portfolio manager focusing on value investing. She has identified a company with a low price-to-earnings (P/E) ratio, low price-to-book (P/B) ratio, and a high dividend yield. Despite these attractive indicators, the company's stock price has been stagnant for years. Which of the following is most likely to be a valid reason for this stagnation?

Options :

A : The company is trading at a high valuation compared to industry peers.

B : The company is experiencing rapid earnings growth.

C : The stock is in an inefficient market where fundamental analysis is less effective.

D : The company is going through a period of financial difficulty or competitive challenge.

Answer: D

Question 5

Which of the following is true about first-order risks in alternative strategy funds?

Options :

A : First-order risks are mainly associated with operational risks in alternative strategy funds.

B : First-order risks primarily affect relative value and event-driven strategies.

C : First-order risks include liquidity, leverage, and default risks.

D : First-order risks are systematic and cannot be mitigated through diversification.

Answer: D