Online Access Free RSE Exam Questions

A client's strategic asset allocation is 60% equities and 40% fixed income. Following a strong equity market, the portfolio becomes 72% equities and 28% fixed income. What action best represents strategic rebalancing?

• A.Leave the portfolio unchanged because rebalancing eliminates growth potential
• B.Purchase additional equities because they have recently performed well
• C.Sell part of the equity allocation and purchase fixed-income investments
• D.Replace all fixed-income investments with cash

An investor expects short-term market interest rates to rise and wants a bond whose coupon income will adjust periodically with prevailing rates. Which instrument best meets this objective?

• A.Fixed-rate perpetual bond
• B.Strip bond
• C.Floating-rate bond
• D.Zero-coupon bond

A 45-year-old investor has been working with their Registered Representative (RR) for over a decade. Their portfolio has been structured to prioritize long-term growth with a moderate risk tolerance. Recently, the investor inherited a substantial sum from a relative, significantly increasing their overall net worth. They are now considering early retirement and have expressed interest in shifting their investment strategy. What should the RR do?

• A.Renew the investor's information and discuss what adjustments should be made in light of this
• B.Keep the investor's investments unchanged to maintain consistency with the client information
• C.Rebalance the investor's portfolio to match the appropriate Investment Dealer model portfolio
• D.Discourage the investor from withdrawing any funds to protect their long-term investment growth

A company reports current assets of $1,200,000, including inventory of $300,000 and prepaid expenses of
$100,000. Current liabilities are $500,000. What is the company's quick ratio?

• A.1.60
• B.1.20
• C.2.40
• D.1.40

A Portfolio Manager, while discussing the performance of their strategy, mentioned that the maximum drawdown for the strategy over the last 20 years was 15%. What does this mean for the return of the strategy over the 20 years?

• A.The strategy has a 15% probability of loss
• B.The strategy declined 15% in its worst year
• C.The strategy suffered a largest peak-to-trough decline of 15%
• D.The strategy declined a total of 15% per year