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HS 328 Investments Questions and Correct
Answers
All of the following is (are) among the responsibilities of FINRA
EXCEPT
A)
educating investors.
B)
fostering market transparency.
C)
writing and enforcing rules governing the activities of all
registered broker-dealer firms and registered brokers in the U.S.
D)
writing and enforcing rules governing the activities of all
registered investment advisors. Ans: The correct answer is (D).The
SEC and state securities regulators are responsible for regulation
of registered investment advisors.
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, 2 | Page
All of the following are likely to be classified as investment
advisers by the U.S. Securities and Exchange Commission (SEC)
EXCEPT
A)
a financial analyst who issues a new report on the performance of
value stocks directly to a client.
B)
an analyst who recommends a triple-A-rated bond to a client.
C)
a money manager who makes asset allocation assignments for
institutional investors.
D)
a financial firm that acts as a dealer in investment grade bonds.
Ans: The correct answer is (D). Broker-dealers are explicitly
excluded from being classified as advisers under the legal
framework of the Investment Advisers Act. Individuals or firms
that issue reports or offer investment advice, including asset-
allocation decisions, are considered to fit the definition of an
investment adviser.
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Which of the following can be greatly reduced by diversification?
A)
Systematic risk
B)
Market risk
C)
Unsystematic risk
D)
Systematic and unsystematic risk Ans: The correct answer is
(C).Unsystematic risk is reduced by diversification.
Sam's retirement fund is expected to earn a nominal rate of 7
percent, and the inflation rate is estimated at 3 percent. What is
Sam's real rate of return?
A)
1.43%
B)
2.33%
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C)
3.88%
D)
4.00% Ans: The correct answer is (C).Real return = (1.07 ÷ 1.03) − 1
= 3.8835%
Security A has the following returns over 4 years: 4%, 7%, 0%, and -
1%. What is the mean return and the standard deviation (sample)
for Security A?
A)
Mean of 2.5% and standard deviation of 3.2%
B)
Mean of 2.5% and standard deviation of 3.7%
C)
Mean of 4% and standard deviation of 3.2%
D)
Mean of 4% and standard deviation of 3.7% Ans: The correct
answer is (B).The mean is 2.5 percent and the standard deviation is
© 2025 All rights reserved
HS 328 Investments Questions and Correct
Answers
All of the following is (are) among the responsibilities of FINRA
EXCEPT
A)
educating investors.
B)
fostering market transparency.
C)
writing and enforcing rules governing the activities of all
registered broker-dealer firms and registered brokers in the U.S.
D)
writing and enforcing rules governing the activities of all
registered investment advisors. Ans: The correct answer is (D).The
SEC and state securities regulators are responsible for regulation
of registered investment advisors.
© 2025 All rights reserved
, 2 | Page
All of the following are likely to be classified as investment
advisers by the U.S. Securities and Exchange Commission (SEC)
EXCEPT
A)
a financial analyst who issues a new report on the performance of
value stocks directly to a client.
B)
an analyst who recommends a triple-A-rated bond to a client.
C)
a money manager who makes asset allocation assignments for
institutional investors.
D)
a financial firm that acts as a dealer in investment grade bonds.
Ans: The correct answer is (D). Broker-dealers are explicitly
excluded from being classified as advisers under the legal
framework of the Investment Advisers Act. Individuals or firms
that issue reports or offer investment advice, including asset-
allocation decisions, are considered to fit the definition of an
investment adviser.
© 2025 All rights reserved
, 3 | Page
Which of the following can be greatly reduced by diversification?
A)
Systematic risk
B)
Market risk
C)
Unsystematic risk
D)
Systematic and unsystematic risk Ans: The correct answer is
(C).Unsystematic risk is reduced by diversification.
Sam's retirement fund is expected to earn a nominal rate of 7
percent, and the inflation rate is estimated at 3 percent. What is
Sam's real rate of return?
A)
1.43%
B)
2.33%
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, 4 | Page
C)
3.88%
D)
4.00% Ans: The correct answer is (C).Real return = (1.07 ÷ 1.03) − 1
= 3.8835%
Security A has the following returns over 4 years: 4%, 7%, 0%, and -
1%. What is the mean return and the standard deviation (sample)
for Security A?
A)
Mean of 2.5% and standard deviation of 3.2%
B)
Mean of 2.5% and standard deviation of 3.7%
C)
Mean of 4% and standard deviation of 3.2%
D)
Mean of 4% and standard deviation of 3.7% Ans: The correct
answer is (B).The mean is 2.5 percent and the standard deviation is
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