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FIA Certification questions with verified answers
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FIA Certification questions with verified answers
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FIA Certification questions with verifiedanswers
(The Markets) Primary Markets - correct answer ✔✔Raise capital for companies, governments & others
(The Markets) Secondary Markets - correct answer ✔✔Permit investors to buy existing instruments from
others or sell the ones they own
(The Markets) Risk - correct answer ✔✔three kinds - operational (systemic), market (liquidity), and credit
(valuation)
(The Markets) Sell-side consists of - correct answer ✔✔Brokers, Dealers, and Investment Banks; defined
as retail brokers and research departments that sell securities and make recommendations for brokerage
firms' customers.
(The Markets) Buy-side consists of - correct answer ✔✔Pension funds, Hedge Funds, Portfolio Managers,
and Insurance Firms; defined as the side of Wall Street comprising the investing institutions that tend to
buy large portions of securities for money-management purposes. Long only fund anagers cannot short
sell securities.
(The Markets) Exchanges and other intermediaries - correct answer ✔✔Depositories & Clearing
corporations - net transactions & guarantee settlement; counterparty to all sides. DTCC = Depository
Trust & Clearing Corp: Owned by its principal users, the DTCC's function is to integrate the NSCC and
DTC, streamlining clearing and depository transactions in attempts to reduce cost and increase capital
efficiency.
(The Markets) Central Banks - correct answer ✔✔Federal Reserve, Bank of England, Bank of Japan
(The Markets) Primary business functions and responsibilities of the Street - correct answer ✔✔Front
office - Institutional sales & account management
Middle office - Accounting, reporting and compliance
Back office - Clearing and Trade Settlement, Risk Management
,(The Markets) Types of Equities - correct answer ✔✔Preferred & Common Stock
(The Markets) CFD - correct answer ✔✔Contract for Difference; defined as a contract between two
parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the
difference between the current value of an asset and its value at contract time. (If the difference is
negative, then the buyer pays instead to the seller.) In effect CFDs are financial derivatives that allow
traders to take advantage of prices moving up (long positions) or prices moving down (short positions)
on underlying financial instruments and are often used to speculate on those markets.
(The Markets) Fixed Income - correct answer ✔✔Loan that pays predetermined (fixed) interest (income)
Short Term - T-Bills, Notes, Commercial Paper, CDs
Long Term - Bonds (Corporates, Munis, Govies), Treasuries (30 Year)
(The Markets) ABS - correct answer ✔✔Asset Backed Securities - loans, leases, credit card debt,
company receivables
(The Markets) MBS - correct answer ✔✔Mortgage Backed Securities - same as ABS but backed by
mortgages
(The Markets) CDO - correct answer ✔✔Collaterized Debt Obligations
(The Markets) CDS - correct answer ✔✔Credit Default Swaps
(The Markets) "Soft Commodities" - correct answer ✔✔A commodity such as coffee, cocoa, sugar and
fruit. This term generally refers to commodities that are grown, rather than mined.
(The Markets) "Energy Commodities" - correct answer ✔✔Trading in energy means buying actual
interests in oil, natural gas, coal or green energy. Investing in the energy market can mean purchasing the
commodity itself to profit from oil price changes or taking part in the import and export of the
commodity for a profit.
(The Markets) Futures & Options - correct answer ✔✔Obligations - A futures contract gives the holder
the right and the obligation to buy or sell
,Rights - An options contract, gives the buyer the right, but not the obligation, and the option writer
(seller) the obligation, but not the right.
(The Markets) Futures & Options "Greeks" - correct answer ✔✔Know that refer to risk modeling of
options
(The Markets) Futures & Options - correct answer ✔✔Chicago is the epicenter of derivatives
(The Markets) ForEx - correct answer ✔✔Foreign Exchange - spot, forwards and swaps
Structured Products - correct answer ✔✔Mutual Funds, UITs, ETFs (Exchange traded funds mimic an
index but trade like an equity)
Contributed data - correct answer ✔✔data that is not derived from the market
Exchange generated data - correct answer ✔✔Produced by quotes and trades on an exchange
Vendor generated data - correct answer ✔✔Aggregation
Normalization
Exchanges (Direct vs. Indirect)
Regional - correct answer ✔✔Asked where Xinhau Finance was located. It's China.
Market data - correct answer ✔✔BBO, Last, Volume, VWAP
Level 1: Bid/Ask - TOB (Top of Book)
Level 2: Full Order Book (FOB), Depth of Book (DOB)
Fundamental data - correct answer ✔✔Balance sheet, Revenues, Sales, P/E
, Corporate Actions: - correct answer ✔✔activities undertaken by a company that can result in changes in
the book value of the security (stock splits, mergers, dividends)
Historical & time series data - correct answer ✔✔increasingly used to backtest algorithms (tick
capture/history)
Ratings Agencies - correct answer ✔✔Moodys, Fitch, S&P
Credit Rating Definition - correct answer ✔✔An assessment of the credit worthiness of individuals and
corporations. It is based upon the history of borrowing and repayment, as well as the availability of
assets and extent of liabilities.
Indices - correct answer ✔✔Examples - DJIA, FTSE100, SP500, CAC40 (France)
Made up of "constituents"
News and commentary - correct answer ✔✔Examples - Dow Jones, Reuters, Bloomberg, Associated
Press
News Sentiment Feed - correct answer ✔✔Machine Readable News
Reference data - correct answer ✔✔(historically batch downloads, monthly, weekly, etc.)
Instrument Codes/Security Identifier/Symbology - correct answer ✔✔CUSIP (US), RIC (Reuters
Instrument Code), ISIN (International Security Identification Number), SEDOL (UK/LSE)
EDM - correct answer ✔✔Enterprise Data Management
Golden Copy - correct answer ✔✔final copy of a database of information
KYC - correct answer ✔✔Know Your Client; In the USA, KYC is typically a policy and process implemented
to conform to a customer identification program (CIP) mandated under the Bank Secrecy Act and USA
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