AFP CTP Practice Questions| TestInsights

Question 1

Which of the following are differences between securities issued through the primary and private capital markets?

I . Cost of issuance and speed of execution

II . Investor base

III . Reasons for the offering

IV . Registration requirements

AI, II, and IV

BI and III

CII and IV

DII, III, and IV

Correct : A

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AI, II, and IV

BI and III

CII and IV

DII, III, and IV

Question 2

An international company with multiple divisions has several types of common stock. The company spun off a new division that is growing very quickly and needs additional funding, but the parent does not want additional ownership investment or additional voters. The company would MOST LIKELY issue what kind of stock?

ATracking stock

BCommon stock

CPreferred stock

DConvertible stock

Correct : A

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ATracking stock

BCommon stock

CPreferred stock

DConvertible stock

Question 3

In comparing the U.S. banking system and foreign banking systems, which of the following statements is true?

AMost foreign banking systems do not have central banks.

BForeign banking systems typically have more financial institutions than the U.S.

CForeign banking systems are not permitted to own equity investments in corporations and U.S. banks are.

DMany foreign banking systems allow notional pooling and U.S. banks do not.

Correct : D

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AMost foreign banking systems do not have central banks.

BForeign banking systems typically have more financial institutions than the U.S.

CForeign banking systems are not permitted to own equity investments in corporations and U.S. banks are.

DMany foreign banking systems allow notional pooling and U.S. banks do not.

Question 4

Which of the following occurs when the U.S. dollar strengthens?

AForeigners will purchase more U.S. goods.

BU.S. exports become more competitive.

CForeign exports become less competitive.

DForeign exports become more competitive.

Correct : D

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AForeigners will purchase more U.S. goods.

BU.S. exports become more competitive.

CForeign exports become less competitive.

DForeign exports become more competitive.

Question 5

An investor is interested in acquiring ownership in a firm while ensuring predictable timing and amount of cash flow. Which instrument should the investor choose?

ABonds

BCommercial paper

CCommon stock

DPreferred stock

Correct : D

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ABonds

BCommercial paper

CCommon stock

DPreferred stock

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