Question 1

What is the primary role of sell-side dealers in the capital markets?

Options :

A : To buy securities from investors and hold them in their own portfolios.

B : To manage large institutional portfolios and execute trades on behalf of pension funds.

C : To act as intermediaries between mutual fund companies and retail clients.

D : To provide services like trading ideas, corporate finance, and research to investors.

Answer: D

Question 2

ABC Mutual Fund has total assets of $20,000,000, total liabilities of $2,500,000, and 1,500,000 units outstanding. What is the NAVPS?

Options :

A : $12.50.

B : $14.00.

C : $11.67.

D : $13.33.

Answer: C

Question 3

As an institutional salesperson, you are dealing with a client who lacks experience in derivatives but is interested in investing in them. The client insists they can handle the risks. What should you do?

Options :

A : Proceed with the transaction since the client is confident in their decision-making abilities.

B : Recommend that the client undergo further education on derivatives before making any investment.

C : Inform the client that they need to pass a suitability assessment before proceeding with the transaction.

D : Advise the client to diversify their portfolio instead of investing heavily in derivatives.

Answer: C

Question 4

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 5

Which of the following best describes the relationship between liquidity and flexibility in managed products?

Options :

A : Low liquidity is directly correlated with high flexibility.

B : There is no relationship between liquidity and flexibility.

C : High liquidity always equals high flexibility.

D : High flexibility can sometimes lead to lower liquidity.

Answer: D

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