IFSE Institute CIFC Exam With Confidence Using Practice Dumps

Gross domestic product (GDP) is a measure of the total economic activity in a country. It is calculated by adding up the market value of all the final goods and services produced within a country’s borders in a given period of time, usually a year or a quarter. Final goods and services are those that are sold to the end users, such as consumers, businesses, or the government, and are not used as inputs for further production. For example, a loaf of bread sold to a consumer is a final good, but the flour used to make the bread is not. The market value of goods and services is the price that buyers are willing to pay for them in the market. This reflects the value added by the producers at each stage of production and avoids double counting. For example, if a farmer sells wheat for $10 to a miller, who then sells flour for $20 to a baker, who then sells bread for $30 to a consumer, the value added at each stage is $10, $10, and $10, respectively. The total value added is $30, which is equal to the market value of the final good (bread). Therefore, GDP only includes the market value of final goods and services and excludes intermediate goods and services.

References: Canadian Investment Funds Course, Unit 4, Section 4.1; 5; 6; 7; 8

The current yield of a bond is the annual interest payment divided by the current market price of the bond. The annual interest payment is the coupon rate multiplied by the par value of the bond. In this case, the annual interest payment is:

6.75%×10,000=675

The current market price of the bond is $9,200. Therefore, the current yield is:

9200675​×100%=7.34%

The current yield is higher than the coupon rate because the bond is selling at a discount, meaning that its market price is lower than its par value. This implies that the bond is offering a higher return than the prevailing market interest rate. However, the current yield does not take into account the capital gain or loss that will occur when the bond matures or is sold. A more accurate measure of the bond’s return is the yield to maturity (YTM), which is the annualized rate of return that accounts for both the interest payments and the price change of the bond over its remaining term.

References:

• Canadian Investment Funds Course (CIFC) Study Guide, Chapter 5: Fixed-Income Securities, Section 5.2: Bond Pricing and Yield, page 5-61
• Current Yield Definition - Investopedia2

A is correct because retractable preferred shares are a type of preferred shares that give the holder the option to sell the shares back to the issuer at a predetermined price and within a specified time. This feature provides the holder with more flexibility and protection against interest rate fluctuations. Participating preferred shares (B) are a type of preferred shares that give the holder the right to receive additional dividends if the issuer’s earnings exceed a certain level. Convertible preferred shares © are a type of preferred shares that give the holder the option to convert the shares into common shares of the issuer at a predetermined ratio and price. Redeemable preferred shares (D) are a type of preferred shares that give the issuer the option to buy back the shares from the holder at a predetermined price and within a specified time. References: Canadian Investment Funds Course (CIFC) | IFSE Institute