1. Which of the following is the best investment choices to take when managing a portfolio of securities? a) Market Timing Decisions b) Securities Selection c) The choice of asset mix d) Chance

2. Which fee is used to compensate the broker on an ongoing basis for selling a mutual fund? a) Trailer Fees b) Switching Fees c) Management Fees (0.5 - 1%) d) Set-up Fee

3. If the market price of a common stock declines, what is the impact on its dividend yield? a) Dividend yield is set by the Board of Directors of the company and is usually fairly stable over time. b) Dividend yield will decrease in response to the price decline. c) Dividend yield will increase in response to the price decline. d) Dividend yield might decline but will lag the price decline as investors respond to the change in price.

4. Which of the following patterns might lead an analyst to sell a stock? a) Bottom Head and Shoulders. b) Crossover of the Moving Average from above . c) Crossover of the Moving Average from below. d) An increase in Breadth.

5. What is the general relationship between P/E ratios and the prevailing level of inflation? a) P/E ratios tend to be positively related to the level of inflation. b) P/E ratios tend to be inversely related to the level of inflation. c) P/E ratios are not impacted by the level of inflation. d) P/E ratios tend to rise as inflation increases but with a lag.

6. Using the Dividend Discount Model (DDM), what is the expected stock price for a company with a current dividend of $ 1.00, an expected growth rate of 10%, and a required rate of return of 18%? a) $ 11.00 b) $ 12.50 c) $ 13.75 d) $ 19.80

7. A company has a debt/equity ratio of 55 %. Other things equal, what impact will the issue of new common shares have on the ratio? a) The ratio will likely rise. b) The ratio will likely fall. c) The issue of preferred shares does not impact the equity component of the company. d) The ratio remains unchanged as the increase in the equity component is offset entirely by the increase in current liabilities

8. Which of the following types of funds would most likely have the lowest MER? a) Bond funds. b) Index funds. c) Balanced funds. d) Asset allocation funds

9. The returns on the Toronto Stock Exchange Index is 20% and the T-Bill rate is 3%, what is the return of the TD Canadian Index fund that tracks the Index. a) 23% b) 17% c) 20% d) 26%

10 Which tax document shows the amount and type of distributions of a mutual fund for the year? a) T6 b) T3 c) T1 d) T4

11. Which of the following type of funds mirrors the market? a) An equity fund. b) A balanced fund. c) A real estate fund. d) An index fund

12. An investor purchased an equity fund several years ago at a total cost of $5,000 and sold it this year receiving $12,500 in total proceeds. During the holding period, the investor reinvested $4,000 in income in additional fund units. What is the investor's capital gain on the fund? a) $1,750 b) $3,500 c) $5,500 d) $7,500

13. ABC Inc. has decided to sell an additional 100,000 preferred and 200,000 common shares. Currently ABC has 50,000 preferred shares and 200,000 common shares outstanding. Other things equal, how will this impact the quick ratio in the short-run? a) It will increase. b) It will decrease. c) It will not change. d) It cannot be determined.

14. ABC Inc. has decided to sell an additional 100,000 preferred and 200,000 common shares. Currently ABC has 50,000 preferred shares and 200,000 common shares outstanding. Other things equal, how will this impact the debt equity ratio in the short-run? a) It will increase. b) It will decrease. c) It will not change. d) It cannot be determined.

15. Which of the following is false about ETFs. a) Passive management style b) Trades on the exchange c) Less tax efficient than mutual funds. d) Highly liquid

16. Which 2 phases in the Equity cycle would you reduce exposure to common stock? a) Peak and trough b) Expansion and contraction c) Trough and expansion d) Contraction and peak

17. Given the following mutual fund data, what is the fund's rate of return using the Modified Dietz method? Beginning of period market value $23,250,000 End of period market value $27,500,000 Sum of each cash flow multiplied by its weight $112,300 Sum of cash flows within the period $100,000 a) 17.76 % b) 17.80 % c) 17.84 % d) 18.28 %

18. Inflation is expected to rise by 2% in the very near future. All things being equal, what would you expect to happen? a) P/E ratios and stock prices to fall. b) P/E ratios to rise and stock prices to fall. c) P/E ratios to fall and stock prices to rise. d) P/E ratios to rise and stock prices to rise.

19. If a company's EPS was $ 1.23 last year and $1.41 was recorded for this year, what is the "trend ratio" for this year? (Assume that last year's value was the 'base' year.) a) 0.87 b) 1.15 c) 18.00 d) 114.63

Trend ratio = (Current amount - base amount) / base amount = (1.41 - 1.23) / 1.23 = 1.15 20. If FGH Inc. reports a quick ratio of 2:1 and current liabilities of $15,000, what is the company's current assets? a) $5,000 b) $10,000 c) $30,000 d) $20,000

21. John who is fund manger generated 1.5% return over the expected return given a certain beta. This excess return is known as: a. Beta b. Alpa c. Excess return d.Profit

22.What do followers of the Random Walk Theory believe about stock markets? a) Technical analysis is not useful. b) Stock markets are inefficient. c) A stock's expected price is the best predictor of its true value. d) Past price changes have a strong link to future price changes.

23. Which of the following statements about P/E ratios is correct? a) P/E ratios tend to increase in a rising market. b) P/E ratios tend to fall in a rising market c) A company with a low P/E is always a better buy than a company with a high P/E. d) P/E ratios tend to be fairly similar between industry groups.

24. Which of the following types of ratios are used to judge a company's ability to meet its short-term debt commitments? a) Value ratios. b) Liquidity ratios. c) Risk analysis ratios. d) Operating performance ratios.

25. An investor purchases shares of a mutual fund with a 4% front-end load. The fund has total assets of $10,000,000 and unpaid expenses totalling $1,000,000. There are currently 1,000,000 shares outstanding. What is the offering price per share of this fund? a) $ 9.000 b) $9.360 c) $ 9.375 d) $10.753

26. An equity mutual fund reports a compound annual return of 7.5 % and an MER of 2.5 %. This means that the MER, expressed as a percentage of the fund's gross return is what amount? a) 7.5 % b) 25 % c) 21 % d) 33 %.

27. If the stock market is expected to decline over the next 12 months, which of the following stocks would you consider the most appropriate investment? a) Big Bank A with a 5 year Beta of 0.73. b) Big Communications Company B with a 5 year Beta of 1.37. c) S&P/TSX Index Fund with a 5 year Beta of 1. d) Big Gold Company C with a 5 year Beta of 1.1 1.

28. Which equity management style is characterized by low P/E multiples and low dividend yields? a) Sector Rotation. b) Growth. c) Value. d) Credit Quality.

29. Which of the following portfolios asset mix would you consider most appropriate for a senior? a) 10 % cash, 40 % long-term bonds, 50 % conservative stocks. b) 10 % cash, 20% medium-term bonds, 25% long-term bonds, 25 % preferred shares, 20 % conservative stocks. c) 5% cash, 25 % medium-term bonds, 30 % long-term bonds, 40 % conservative stocks. d) 5 % cash,30 % medium-term bonds, 30 % long-term bonds, 35 % conservative stocks.

30. An investor purchases an 8 % Canadian corporate bond at a price of 102. Other things equal, what primary risk would the investor be most concerned with? a) Business risk. b) Interest rate risk. c) Foreign exchange risk. d) Political risk.

31. Which of the following statements about correlation is false? a) Adding weakly correlated stocks to a portfolio reduces risk. b) Perfectly negatively correlated stocks result in a portfolio with low risk. c) Risk is not reduced by adding perfectly positively correlated stocks. d) Continuing to add stocks to a portfolio will continue to reduce risk significantly.

32. A portfolio has a market value of $455,000 at the start of the year. The portfolio has an end of year value of $610,000. What is the pre-tax return? on the portfolio? a) 25.41 % b) 38.43 % c) 34.06 % d) 74.59 %

33. The holdings of a large-cap equity fund are very close to the market weightings of the sector's benchmark. What strategy is the fund manager likely following? a) Closet indexing. b) Passive indexing. c) Active allocation. d) Sector rotation

34. Which of the following is not a feature of Target-dated Funds? a) They trade on the stock market. b) The asset allocation changes from higher risk to lower risk as the maturity date approaches c) Maturity date is selected when buying fund based on some goal. d) Maturity date and glide path.

35. The Beta for the S&P 500 US Market is a) 2 b) 1 c) 3 d) 1.5

36. Which of the following is not a type of ETF? a) Index based b) Covered put c) Inverse d) Active

37. Consider the following portfolio: Stock Return Market Value ABC 8.00 % $10,000 DEF 11.00 % $40,000 GHI 13.00 % $25,000 KLM 13.50 % $25,000 What is the expected return on the portfolio? a) 11.38 % b) 11.50 % c) 11.83 % d) 12.23 % 38. Which of the following is true about MFDA? a) regulates the members selling mutual funds b) regulates how the funds are sold. c) regulates the funds. d) regulate the brokerage firms.

39. Which of the following is not is measure of risk? a) Beta b) Variance c) Systematic risk d) Standard Deviation

40. Which fund category carries the highest risk? a) Bond funds. b) Speciality funds c) Balanced Funds d) Fixed Income funds.

41. If interest rates are currently rising and the long-term growth rare is falling, in what direction will prices change, based on the Dividend Discount Model? (Assume a constant dividend rate). a) Prices should rise. b) Prices should fall. c) Prices will rise at first but then fall as the economy moves through the equity cycle. d) Prices are not influenced by these factors.

42. Which of the following is not considered a systematic risk? a) Inflation b) Business cycle c) Geographic location. d) Markets

43. Which type of asset allocation strategy has the potential of reducing returns in a strong market period? a) Tactical asset allocation. b) Passive asset allocation. c) Dynamic asset allocation. d) Active asset allocation.

44. Other things equal, which of the following types of funds would you recommend to a retired client looking for a steady stream of investment income? a) A high yield bond fund. b) A preferred share dividend fund. c) A large cap equity fund. d) A bottom-up equity fund.

45. Due to cash flow problems, Company ABC has had to issue more and more debt this year to meet its short-term obligations. For investors holding the company's long-term bonds, what type of risk are they most exposed to? a) Liquidity risk. b) Inflation rate risk. c) Beta risk. d) Default risk.

46.What is the correct order for an industry life cycle? a) Emerging, mature, growth, decline. b) Mature, growth, emerging, decline. c) Emerging, growth, mature, decline. d) Emerging, decline, mature, growth.

47. Which of the following costs is excluded from the calculation of the management expense ratio (MER)? a) Audit fees. b) Interest charges. c) Custodial fees. d) Trading fees

48. Which if the following is not a main asset class? a) Cash and cash equivalents b) Fixed income securities c) Derivatives d) Equities

49. Which of the following documents is designed to give investors key information about a mutual fund in an easily understood format and described in plain language. a) National Policy statement b) Prospectus c) Fund Facts Disclosure d) Annual report

50. The selling of mutual funds is regulated by: a) IIROC b) Securities commission c) MFDA d) Government