AIS Exam Prep Questions


Chapter 10: International Investing
16. What are legal and accounting concerns with international investing?

I.          Shareholder (and bond investor) legal rights can vary by country, sometimes substantially.

II.        Corporate governance standards are not uniform in international markets, and especially in a number of the emerging economies markets.

III.       Some countries, such as China, have multi-tiered equity markets, where shares of the same company are issued with different associated shareholders rights and privileges, and even trade on different exchanges.

IV.       The investor must rely on foreign legal remedies in case shareholder (or lender) litigation occurs. Even if the domestic investor is successful in suing the foreign company in the investor’s domestic courts, it may prove very difficult to collect a judgment against the foreign company. Investors have to rely on whatever legal remedies are available in the company’s home country.

a)         I, II

b)         I, II, III

c)         I, II, IV

d)         I, II, III, IV

Chapter 12: Managing Your Client’s Investment Risk
12. What is correct about beta?

I.          Beta is a measure of the systematic risk of an investment. While it can be calculated for any type of investment, beta is usually calculated for equity securities or a portfolio of equity securities, such as an equity mutual fund.

II.        Beta is a measure of the relative risk of a security compared to the risk of the overall market, which is usually taken to be a broad market index of securities. The beta of a security can be calculated relative to any market index. For example, the beta of a mutual fund is often calculated relative to its benchmark index, which could be a broad market index such as the S&P/TSX Composite Index or the S&P 500 Index, or a narrow-based index, such as one of the S&P/TSX sub indices.

III.       By definition, the market index has a beta of 1. Securities with a beta of greater than 1 have more unsystematic risk than the market, and securities with a beta of less than 1 have less unsystematic risk than the market.

IV.       All else being equal, the greater the beta, the greater the risk of the security relative to the risk of the market. Technically, betas can be any number, positive or negative, but, when calculated relative to a broad-market index, it is unusual to find any security with a negative beta, or with betas exceeding 2 or 3.

a)         I, II

b)         I, II, III

c)         I, II, IV

d)         I, II, III, IV


16 d)    I, II, III, IV

12. c)   I, II, IV

Statement III is incorrect. Securities with betas of greater than 1 have more systematic risk (not unsystematic risk) than the market, and securities with betas of less than 1 have less systematic risk (not unsystematic risk) than the market.

AIS Exam Prep Questions



Chapter 1: The Canadian Wealth Accumulation Market
1. Classifications provide valuable insight into client needs and expectations, but each individual is unique. This is why the individual ____?____  process is so vital.

a)         life cycle
b)         life transition
c)         client discovery
d)         seed capital formation

Chapter 5: Fundamental Analysis

2. The P/E ratio, the price to book ratio and the price to sales ratio are examples of ?

a)         absolute valuation models
b)         relative valuation models
c)         MPT
d)         CAPM


1. c)     client discovery

2. b)     relative valuation models

Advanced Investment Strategies (AIS) Questions



Chapter 5: Fundamental Analysis

1. What is correct about fundamental analysis?

I.    Fundamental analysis is the study of variables (including management, sales, regulatory environment and labour costs) that affect the profitability of a company, its industry and the economy within which it operates.

II.  At the heart of fundamental analysis is the concept of intrinsic value. The intrinsic value of a security is the estimate or opinion of what the security’s market price should be, either currently or in the future.

III. Every firm’s stock has an intrinsic value determined by those variables that affect profitability, and the current price of a stock fluctuates toward that value.

IV. The task of fundamental analysis is to determine if the intrinsic value is above or below the current price of the stock. If the market price of the stock is above the intrinsic value, the analysis suggests that the stock should be purchased.

a)   I, II

b)   I, II, III

c)   II, III, IV

d)   I, II, III, IV


Chapter 9: Analysis of Non-Conventional Asset Classes and their Structures

2. Relative value hedge funds would include which of the following?


I.          Long/short equity funds

II.        merger or risk arbitrage

III.       convertible arbitrage

IV.       global macro funds

V.        fixed-income arbitrage strategies

VI.       equity market-neutral funds


a)         II, IV, V

b)         I, III, IV

c)         III, V, VI

d)         II, IV, V, VI




1. b)    I, II, III

Statement IV is incorrect. The stock should not be purchased if its market price trades above its intrinsic value.


2. c)     III, V, VI