C D C A A
Correct answers are C B C D A
Thanks maratikus, missed by 1!! I don’t know how the 2 economicsts are telling the truth? - Dinesh S
On the econ question I personally chose C(incorrect^2) because the question asks “why increased inflation causes NOMINAL interest rate to rise”. Since nominal interest rate = real interest rate + inflation rate, the increased nominal rate is caused by the fact that the inflation rate, which is part of the nominal rate, increases.
Millidge’s argument is fairly straightforward I think, because increased investment will drive up the rates. The other dude: I personally got thrown off by the “supply financial capital” part. This is my logic. Appreciate if someone could confirm/clarify this. If prices are rising, clearly consumers are less willing to forego current consumption for future consumption. So effectively, they will be borrowing more (and not saving/“supplying financial capital”), which will drive up the rates?
maratikus can you give reasons on 1) and 4) please?
nvm
Does anyone else get D for the economic question, and why?
I don’t like question 1, whose to say the Member didn’t research everything needed to vote the proxy. It is only a breach if you vote willy-nilly like.
elltel, here are the answers from Schweser: Proxies have economic value to the client. To comply with Standard III(A), the analyst is obligated to vote proxies in an informed and responsible manner. A cost benefit analysis may show that voting all proxies may not benefit the client, so voting proxies may not be necessary in all instances. Directed brokerage occurs when the client requests that a portion of the client’s brokerage be used to purchase services that directly benefit the client. Although, this may prevent best execution, it does not violate the Standards as it was directed by the client, not the brokerage firm. Both explanations are correct. Higher inflation results in increased demand for financial capital and decreased supply of financial capital. Both cause nominal interest rates to increase.
Which of the following statements about fixed income securities is FALSE? A) The corporate bond sector is more important in the US than in Japan and Germany. B) The main innovation of CMO is that they offer stable maturities to investors. C) Coupon interest and capital gains from municipal bonds are tax exempt at the federal level. D) Treasuries and agencies are quoted in 32nds of a price point.
Deferred tax liabilities might be considered neither a liability nor equity, when: A) non-reversal is certain. B) they are likely to result in cash out flow. C) some components are likely to reverse and some components will grow. D) financial statement depreciation is inadequate.
C
c? are capital gains tax exempt?
During the 1920s in Germany and during the 1980s in Brazil and Israel, inflation reached hyperinflationary levels. People received their wages and spent them immediately. Companies received revenues from their sales and immediately paid them out as wages and dividends. This behavior best reflects which one of the following adverse effects of inflation for an economy? A) Tax distortion. B) Gains by employers at the expense of employees. C) Increased investment risk. D) Increased transactions costs.
c was correct, capital gains are not tax-exempt.
Second question: D
Consider the following statements: Statement 1: “When oligopoly firms cheat on price fixing agreements, the resulting price and output quantity approaches that of perfect competition.” Statement 2: “Monopolistic competition is inefficient because a large deadweight loss from advertising and marketing costs is a characteristic of this form of competition.” Which of the following best describes the accuracy of these statements? Statement 1 Statement 2 A) Incorrect Correct B) Correct Incorrect C) Correct Correct D) Incorrect Incorrect
you are right, alpenchev! I don’t post questions fast enough to keep up with you 
Paul Drake is employed by a company to provide investment advice to participants in the firm’s 401(k) plan. Company stock is one of the investment options in the plan. Drake feels that the stock is too risky for employees to own in their 401(k) plan and starts advising them to pull out of the stock. The Treasurer of the company calls Drake and tells him that he will be fired if he continues making such advice because he is violating his fiduciary duty to the company. Drake should: A) cease making sell recommendations because of the harm that can come to himself. B) make sell recommendations but point out that the company Treasurer has a differing and valid point of view. C) continue to advise employees to sell their stock. D) tell employees that he cannot provide advice on company stock because of a conflict of interest.