2024 FP 513 REAL LATEST EXAM WITH QUESTIONS AND WELL VERIFIED ANSWERS [LATEST VERSION]//GRADE A+ ANSWERS 2024!!!
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Course
2024 FP 513
Institution
2024 FP 513
2024 FP 513 REAL LATEST EXAM
WITH QUESTIONS AND WELL
VERIFIED ANSWERS [LATEST
VERSION]//GRADE A+ ANSWERS
2024!!!
An investor wants all of her bonds to mature in 10 years. She
buys two bonds immediately, two bonds two years from now, and
two more bonds four years from now. As a result, t...
2024 FP 513 REAL LATEST EXAM
WITH QUESTIONS AND WELL
VERIFIED ANSWERS [LATEST
VERSION]//GRADE A+ ANSWERS
2024!!!
An investor wants all of her bonds to mature in 10 years. She
buys two bonds immediately, two bonds two years from now, and
two more bonds four years from now. As a result, the bonds
purchased immediately have a maturity of 10 years, the bonds
purchased two years later have a maturity of eight years, and the
bonds purchased four years later have a maturity of six years.
Select the type of bond strategy she is using for her portfolio. -
ANSWER-The answer is bond bullet. When using the bond bullet
strategy, an investor purchases a series of bonds with similar
maturities focused on one point in time. This strategy may be an
effective method in matching duration to the cash needs of an
investors.
,Carol sells her AA rated 5% YTM bond for $940 and buys a BB-
rated 6% bond for $900. Both bonds mature in four years. This
transaction illustrates which of these swaps? - ANSWER-he
answer is a pure yield pickup swap. In a pure yield pickup swap, a
lower YTM bond is substituted for a higher YTM bond.
Distributions of dividend and capital gains in cash to mutual fund
investors
are fully taxable to the investor.
are added to the tax basis of the shares once taxes on the
distributions are paid.
decrease the taxable gain or increase the loss on sale of the
shares after taxes are paid.
decrease the cost basis of the shares whether or not taxes are
paid - ANSWER-The answer is I only. If the dividends and capital
gains are reinvested, the individual receives an increased tax
basis. If the distributions are made in cash, there is no increase in
the tax basis of the underlying securities.
Jennifer owns a state public purpose bond. She sells the bond
and realizes a capital gain of $4,000. Prior to selling the bond, the
total interest she had earned for the year was $99. Considering
the sale and the interest amount, calculate the amount she must
include in gross income. - ANSWER-$4,000
the interest on public purpose bonds is received tax-free by the
holder. Only the capital gain realized on the sale is subject to
income taxation
,Chris owns a bond that is convertible into common stock at $38
per share and has a coupon of 6.0%. Interest is paid
semiannually. The current market price of the stock is $42 per
share. The investment value of the bond is $1,050, and the bond
currently sells for a market price of $1,225.
Which one of these percentages is closest to the downside risk of
this bond? - ANSWER-he answer is 14.29%. The downside risk of
the bond is $175 ($1,225 current market price - $1,050
investment value). This translates into 14.29% ($175 downside
risk ÷ $1,225 current market value).
LO 2.2.1
A money market mutual fund manager recently purchased
negotiable, short-term, unsecured promissory notes issued by a
number of large corporations for the portfolio. Select the type of
investment the money manager purchased. - ANSWER-
Commercial paper:
Commercial paper is usually issued in denominations of $100,000
or more and is a substitute for short-term bank financing.
Commercial paper is normally sold at a discount and is rated for
quality by a rating service.
choose the risk that is attributable to cash and cash equivalents. -
ANSWER-Purchasing power risk
, An investor holding a Treasury bill as of the date of maturity
includes - ANSWER-the amount of the discount as ordinary
income.
Which of these is NOT a characteristic of negotiable certificates of
deposit (CDs)? - ANSWER-They are used as short-term drafts
drawn to finance imports and exports.
Select the arrangement that is commonly used by dealers in
government securities to satisfy short-term liquidity needs. -
ANSWER-Repurchase agreement
Dealers in government securities use repurchase agreements, or
repos, to satisfy short-term liquidity needs.
All of the following correctly identify features of limited
partnerships except - ANSWER-the limited partners may
participate in the management of the partnership.
The answer is the limited partners may participate in the
management of the partnership. Disadvantages of limited
partnerships include the following: (1) they are generally riskier
than bonds or exchange-traded equities; (2) they are generally
illiquid; (3) limited partners cannot participate in the management;
and (4) the sale of partnership interest may be restricted. In
addition, the general partner has unlimited liability.
LO 1.1.1
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