1. Equity factors are ______ that have historically provided additional _______.

a. bond features | return risks

b. characteristics | risk premium

c. risk entitlements | risk ingredients

d. risks | refunds

2. If a bond's price increases, its market yield will _________.

a. stay the same

b. Increase

c. rise

d. decrease

3. The Pure Expectations theory implies that a normal yield curve is

a. Uncommon for US Treasuries but not municipal bonds

b. Common for municipal bonds but not US Treasuries

c. An Indication that rates are increasing in the future

d. An Indication that rates are decreasing in the future

4. In response to unusually high inflatation, the Federal Reserve has become more recent actions. a. Hawkish

b. Dovish

c. Aggressive

d. Passive

5. You purchased $5,000 worth of an ETF that mimics the return of the S&P 500 equities. Your brother purchased $5,000 worth of a mutual fund that invests in long term debt of S&P 500 companies. Which investment would you expect to earn a higher total return over the long term considering historical returns as a guide?

a.S&P 500 Equities ETF

b. S&P 500 Corporate Bond Fund

c. both should have the same return

d. not enough information provided

6. What are the first 3 factors identified in equity Investing?

a. Beta, Market and Value

b. Size, Value, and Market

c. Beta, Liquidity and Momentum

d. Market, Size and Quality

7. ________ is an unavoidable risk in a fixed rate US Treasury note.

a. Credit Risk

b. Optionality Risk

c. Liquidity Risk

Inflation Risk

8. An option provides the owner with the _______ to purchase or sell a specified asset at a specified price on or before a specified date.

a. ability

b. financing

c. right

d. obligation

9. A graphic depiction of the ex-ante risk-reward tradeoff for investments with risk on the X-axis and expected return on the Y-axis.

a. can be inverted sloping shawing rationale investors do not always expect higher return for higher risk because returns don't always follow expectations.

b. should always be upward sloping for rationale Investors who expect higher return for higher risk. c. is based on the pure expectations theory which shows that investors will predict future rates in determining return.

d. is inconsistent with long term historical returns

10. Thinking about the "Present Value of Cash Flows" valuation model, holding everything else constant what policy initiative(s) taken by the Federal Reserve would be more likely to cause a security's price to decline?

a. Fed Easing Policy

b.Decrease Discount Rate

c. Quantitative Tightening

d. Open Market Operations that reduce the Fed Funds rate

11. Which of the following is an example of idiosyncratic risk?

a. The Fed's current policy could push the economy into a recesssion.

b. Higher interest rates may make all companies underperform vs. their earnings estimates.

c. A recession may cause consumers to buy only basic necessities.

d. A firm recalls a product that accounts for 80% of its sales.

12. Indirect investing involves

a. mutual funds and ETFs

b. mutual funds but not ETFs

c. ETFS but not mutual funds

d. none of the above