42 Free Online CFA Level 1 Practice Questions on Alternative Investments

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Options to buy (calls) or sell (puts) securities with longer maturity dates of up to several years, also known as long term options.

• LEAPs
• Puts
• Bonds
• Calls

Securities issued against some type of asset-linked debts bundled together, such as credit card receivables or mortgages

• Derivative Securities
• Fixed Income Securities
• Asset-backed Securities (ABS)
• Senior Securities

Gives the issuer the right to call in a security and retire it by paying off the obligation.

• LEAPs
• P/E Ratio
• Calls
• Call provision

The division of a corporations stock by issuing a specified number of new shares while lowering the face value of outstanding shares

• Stock Split
• Stock Dividend
• Book Value
• Calls

The ease in which an asset can be converted into cash.

• Puts
• Dividends
• Liquidity
• Options

Commitments today to transact in the future

• Forward Contracts
• Warrant
• Corporate Bonds
• Income Trusts

a payment by a corporation of a dividend in shares of stock rather than cash

• Stock Split
• Dividends
• Book Value
• Stock Dividend

Long term bonds sold by the US Government

• Zero Coupon Bond
• Treasury Bond
• Bonds
• Corporate Bonds

A bond sold with no coupons at a discount and redeemed for face value at maturity. Also known as a strip bond.

• Retractable Bonds
• Corporate Bonds
• Zero Coupon Bond
• Treasury Bond

Investments instruments that pay out a substantial portion of cash flows generated from the underlying revenue generating assets

• Debenture
• Income Trusts
• Financial Assets
• Mutual Funds

The redemption value of a bond paid at maturity, generally $1000

• Book Value
• Capital Markets
• Par Value (Face Value)
• Derivative Securities

Options to buy a specified number of shares of stock at a stated price within a specified period

• Calls
• LEAPs
• Bonds
• Puts

The accounting value of common equity as shown on the balance sheet

• Book Value
• Bond Rating
• Stock Split
• Money Market

An unsecured bond backed by the general financial worthiness of the firm

• Puts
• Bonds
• Debenture
• Warrant

Securities such as bonds with specified payment dates and amounts

• Fixed Income Securities
• Derivative Securities
• Senior Securities
• Fixed income or equity.

The markets for long term securities such as bonds and stocks

• Money Market
• Financial Assets
• Capital Markets
• Mutual Funds

The percentage of a firm's earnings paid out in cash to its stockholders, calculated by dividing dividends by earnings

• Book Value
• P/E Ratio
• Payout ratio
• Bond Rating

An equity security representing the ownership interest in a corporation

• Bonds
• Common Stock
• Book Value
• Options

The most common method of indirect investing involves?

• Options
• Bonds
• Dividends
• Mutual Funds

The income component of a stock's return, generally calculated by dividing the current annual dividend by the prevailing market place

• Liquidity
• Debenture
• Dividend Yield
• Dividends

An option created by a corporation to purchase a stated number of common shares at a specified price within a specified time.

• LEAPs
• Options
• Warrant
• Calls

Rights to buy or sell a stated number of shares of stock within a specified period at a specified price

• Warrant
• Bonds
• Puts
• Options

Securities that derive their value in whole or in party by having a claim on some underlying security

• Fixed Income Securities
• Senior Securities
• Derivative Securities
• Dividends

Letters assigned to bonds by rating agencies to express the relative probability of default

• Book Value
• Bond Rating
• Bonds
• P/E Ratio