FINC340 unit 1 assignment-INTRODUCTION TO INVESTMENTS

Subject: Business    / Finance
Question

FINC 340: INVESTMENTS

UNIT #1A INTRODUCTION TO INVESTMENTS

Question Number

Question

1

Describe and Investment Policy Statement (IPS):

A. An IPS details the organization’s procedures for all client investments

B. An IPS is created by the Board of Trustees

C. An IPS is a FINRA required document

D. An IPS addresses the objectives of the client or pension plan

2

Which of the following are deposit-taking institutions (DTIs)?

1. Building societies

2. Insurance companies

3. Investment trust companies

4. Retail banks

5. Pension funds

DTIs are the following:

A. 2 – 4

B. 1 and 4

C. 1 and 2

D. 3 – 5

3

All of the following make an IPS important, EXCEPT:

A. Helps define all associated parties of their responsibilities

B. Sets target asset allocations

C. Will remove all emotions from the investment process

D. Helps identify potential risks the pool of assets may face

4

Which of the following is the reason why economic sticklers would not consider shares / equities as financial instruments:

A. Shares represent part-ownership in the company and are not redeemable

B. Companies can re-purchase their shares

C. Preferred shares are closer to debt instruments

D. Companies can have debt and shares, they are substitutes for each other

5

Which of the following are functions of a financial system?

1. The operation of a payment system

2. Providing the means of portfolio adjustment

3. Helping to reduce unemployment

4. Channelizing funds between lenders and borrowers

5. Helping speculators to bet on price movements

Functions of a financial system include:

A. 1, 2, and 4

B. 2, 3, and 5

C. 2 – 5

D. 1 and 5

6

Which of the IPS’s factors would change if the client went to another financial professional?

A. Investment strategies

B. Amount invested by the client

C. Responsibility for the risk management

D. Client objectives

7

Derivatives can be strictly defined as

A. Financial instruments

B. Securities with strong economic foundations

C. Contracts that may lead to profits or losses

D. Representatives of “claims” of holders on issuers

8

Which one of the following is the definition of an Investment Policy Statement (IPS)s:

A. A Specific document to govern investing activities

B. An agreement about services and prices

C. An engagement letter for investing services

D. Protects the client from investment losses

9

Constructing and IPS is the responsibility of

A. Financial professional

B. Investor

C. Financial professional and investor

D. Portfolio manager

10

How would you classify an Exchange Traded Fund (ETF)?

A. Collective investment scheme (CISs)

B. Alternative investments

C. Contractual intermediaries

D. Quasi-financial intermediaries (QFTs)

11

The most important component of an IPS is:

A. Statement of purpose

B. Investment objectives and constraints

C. Appendices

D. Signature of the investor

12

A well-defined IPS should include of the following, EXCEPT:

A. Investment strategy and asset allocations

B. Definition of duties and objectives

C. Purpose and scope

D. How much should be invested

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