CFM — Certificate in Financial Markets Investor Practice Questions
The free CFM — Certificate in Financial Markets questions that deal with investor, with answers and explanations. The full bank and the timed practice test cover every topic the exam asks about.
Question #5
If a new investment opportunity arises that has a higher expected return than the market, an investor may choose to:
Correct answer: D
Explanation
Switching entirely to the new investment suggests a preference for higher returns despite potential risks.
Question #6
An investor assesses a project with a payback period of 5 years. If the project lasts 10 years, what does this indicate?
Correct answer: A
Explanation
A payback period of 5 years in a 10-year project indicates that profits exist after recovering the initial investment, suggesting long-term profitability.
Question #9
If an investor expects a recession, what type of stocks should they consider?
Correct answer: D
Explanation
In a recession, dividend-paying stocks tend to be more stable and attractive due to their consistent payouts, compared to growth stocks which may be riskier.
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