What is the meaning of the Standard I-D of Professionalism “Misconduct”?
Cooper is an advisor with W&W Investment Firm and he manages accounts of wealthy clients. This Investment Firm has a policy for advisors to correct within 15 days, all trades with some kind of error and the difference between the trade price and the current price is charged to the advisor´s personal account through an
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What is the relationship between risk driver, risk position, and risk exposure?
The risk management is the process of identifying the level of risk an organization wants, measuring the level of risk the organization currently has, taking actions that bring the actual level of risk to the desired level of risk, monitoring the new actual level of risk so that it continues to be aligned with the
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How do hedge fund managers implement leverage in their investment vehicles?
Leverage is an important characteristics that differentiates mutual funds from hedge funds. How can hedge fund managers introduce leverage in their investment vehicles? a) Derivatives, borrowing, and short selling. b) Long and short positions, success fees, and derivatives. c) Borrowing, short selling, and cryptocurrencies. https://vimeo.com/manage/videos/1003517704
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What are the main differences between futures and forwards in terms of cash flows?
Futures and forwards are derivatives contracts with a lot of similarities, although forwards are OTC contracts while futures are ETD contracts. What are the main differences between both derivatives in terms of their cash flow patterns? a) Daily settlement and short positions. b) Short positions and margin requirements. c) Daily settlement and margin requirements. https://vimeo.com/manage/videos/1003537968
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What is the relationship between the discounting rate and the coupon rate in Bonds?
When dealing with plain vanilla fixed-income securities, there is a clear relationship between the discounting rate of the cash flows and the coupon rate reflecting the trading price (below, above or at par). If the coupon rate is lower than the discounting rate in percentage terms, we conclude that: a) The bond is trading below
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What is the meaning of the acronym PESTLE?
When referring to the different steps in the industry and competitive analysis, after defining the industry, do some industry surveys, and analyze the industry structure, we focus on external influences, such as the competitive analysis or the “PESTLE” influences on the industry. The acronym PESTLE stands for: a) Political, Economic, Social, Technological, Legal and Environmental.
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How do we compute the cost of capital of companies using weighted averages?
In order to determine the cost of capital of corporations, we take the different components of capital and calculate a weighted average known as WACC (Weighted Average Cost of Capital). Which of the following sentences is correct regarding the calculation of WACC? a) It is a marginal cost. b) The marginal cost of ordinary equity
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Which accounting method is less likely to suffer from an inventory write-down?
An inventory write-down or an inventory impairment is defined as an accounting term that recognizes when your inventory’s market value falls below the book value, but it still considered sellable. Under an scenario of inventory increasing costs, which of the following inventory accounting methods is less likely to suffer an inventory write-down? a) FIFO. b)
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What are the main restrictions to trade that can be imposed by governments?
There is a great variety of trade restrictions that governments can impose private corporations. Which of the following trade restrictions is based on stipulation that some percentage of the value added or components used in production should be of domestic origin? a) Domestic Content Provisions. b) Voluntary Export Restraints (VERs). c) Export Subsidies. https://vimeo.com/manage/videos/1003557866
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Why is the lognormal distribution so relevant in applied finance?
The lognormal distribution is extensively used in applied finance. Which of the following sentences is more appropriate in relation to this well-known distribution? a) It is useful for simulating financial asset returns because it has no negative values, and positive skewness. b) It is useful for representing the returns of underlying assets in some
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