Question 1

Which of the following is a difference between an exchange traded fund (ETF)and a mutual fund?

Accepted Answer

A) An ETF is a fixed income instrument, whereas a mutual fund is a variable income instrument. 
B) An ETF can only be traded at the end of the day, whereas a mutual fund can be bought or sold throughout the trading day. 
C) An ETF provides more favorable tax treatment than a mutual fund. 
D) An ETF is a convertible security, whereas a mutual fund is a nonconvertible security. 
E) An ETF is a hybrid security, whereas a mutual fund is not a hybrid security. 
A) An ETF is a fixed income instrument, whereas a mutual fund is a variable income instrument. 
B) An ETF can only be traded at the end of the day, whereas a mutual fund can be bought or sold throughout the trading day. 
C) An ETF provides more favorable tax treatment than a mutual fund. 
D) An ETF is a convertible security, whereas a mutual fund is a nonconvertible security. 
E) An ETF is a hybrid security, whereas a mutual fund is not a hybrid security. C

Question 2

You have inherited $250,000. You have decided that since you don't need the money currently, you should invest the money in order to meet future expenses. After seeking advice, you decide on an asset allocation plan that puts 10% in short-term securities, 75% in equities, and 15% in bond funds. How much money would you put in each category? (Show all work.)

Accepted Answer

Following are the amounts invested in each category:   See 11-6: Managing Your Investment Holdings.

Question 3

_____ is a risky short-term investment activity.

Accepted Answer

A) Purchasing life insurance 
B) Buying real estate 
C) Speculating in securities 
D) Investing in mutual funds 
E) Systematically saving for retirement 
A) Purchasing life insurance 
B) Buying real estate 
C) Speculating in securities 
D) Investing in mutual funds 
E) Systematically saving for retirement C

Question 4

_____  involves dividing a portfolio among different classes of securities in order to preserve the capital by protecting the portfolio against negative market developments.

Accepted Answer

A) Arbitration 
B) Asset allocation 
C) Portfolio tracking 
D) Estate planning 
E) Investor management 
A) Arbitration 
B) Asset allocation 
C) Portfolio tracking 
D) Estate planning 
E) Investor management

Question 5

When you buy 300 shares of a company, you have purchased a(n):

Accepted Answer

A) odd lot. 
B) round lot. 
C) combined lot. 
D) even lot. 
E) prime lot. 
A) odd lot. 
B) round lot. 
C) combined lot. 
D) even lot. 
E) prime lot.

Question 6

The _____ reflects the total market value of over 98 to 99% of all publicly traded stock in the United States.

Accepted Answer

A) Dow Jones Industrial Average Index 
B) Standard & Poor 500 Index 
C) National Association of Securities Dealers Automated Quotations Index 
D) Dow Jones Wilshire 5000 Index 
E) New York Stock Exchange Index 
A) Dow Jones Industrial Average Index 
B) Standard & Poor 500 Index 
C) National Association of Securities Dealers Automated Quotations Index 
D) Dow Jones Wilshire 5000 Index 
E) New York Stock Exchange Index

Question 7

The over-the-counter market is a primary market.

Accepted Answer

A) True 
 B)False

Question 8

The financial ratios of a company are included in its annual stockholders' report.

Accepted Answer

A) True 
 B)False

Question 9

_____ is a process to settle disputes between a brokerage firm and its clients.

Accepted Answer

A) Diversification 
B) Estate planning 
C) Arbitration 
D) Asset allocation 
E) Portfolio tracking 
A) Diversification 
B) Estate planning 
C) Arbitration 
D) Asset allocation 
E) Portfolio tracking

Question 10

There is generally a trade-off between earning a high current income from an investment and obtaining significant capital appreciation from it.

Accepted Answer

A) True 
 B)False

Question 11

The new securities sold in primary markets are handled by a(n):

Accepted Answer

A) security exchange council. 
B) dealer. 
C) investment banker. 
D) credit bureau. 
E) insurance agent. 
A) security exchange council. 
B) dealer. 
C) investment banker. 
D) credit bureau. 
E) insurance agent.

Question 12

Reviewing the amounts of income that you can realistically expect to receive from Social Security and your employee pension helps you to decide whether they will be adequate to meet your needs.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following characteristics of an investor should be evaluated to formulate an effective portfolio strategy?

Accepted Answer

A) Level of professional investment knowledge 
B) Interest in specific activities 
C) Level and stability of income 
D) Level of Internet skills 
E) Judgment skills to buy and sell securities 
A) Level of professional investment knowledge 
B) Interest in specific activities 
C) Level and stability of income 
D) Level of Internet skills 
E) Judgment skills to buy and sell securities

Question 14

A bear market condition is associated with:

Accepted Answer

A) investor optimism. 
B) declining securities prices. 
C) economic recovery. 
D) increased tax rate. 
E) high returns. 
A) investor optimism. 
B) declining securities prices. 
C) economic recovery. 
D) increased tax rate. 
E) high returns.

Question 15

When completed, an investment plan is a way of translating an abstract investment target into a specific investment program.

Accepted Answer

A) True 
 B)False

Question 16

Instructing your broker to buy or sell a stock at a particular price is a:

Accepted Answer

A) limit order. 
B) market order. 
C) margin order. 
D) regular order. 
E) stop order. 
A) limit order. 
B) market order. 
C) margin order. 
D) regular order. 
E) stop order.

Question 17

The most important investment prerequisites are:

Accepted Answer

A) ample income and debt. 
B) ample income and confidential information. 
C) ample insurance and liquidity. 
D) an investment plan and a nonmonetary goal. 
E) inconsistency and risk awareness. 
A) ample income and debt. 
B) ample income and confidential information. 
C) ample insurance and liquidity. 
D) an investment plan and a nonmonetary goal. 
E) inconsistency and risk awareness.

Question 18

Which of the following is a characteristic of a stop-loss order?

Accepted Answer

A) The stop-loss order is the quickest way to have an order filled. 
B) The stop-loss order allows buy orders to be filled at the lowest price. 
C) The stop-loss order allows stocks to be purchased at the current market price. 
D) The stop-loss order sells a stock when the market price drops below a specified price. 
E) The stop-loss order is used to buy stocks at a 10% margin. 
A) The stop-loss order is the quickest way to have an order filled. 
B) The stop-loss order allows buy orders to be filled at the lowest price. 
C) The stop-loss order allows stocks to be purchased at the current market price. 
D) The stop-loss order sells a stock when the market price drops below a specified price. 
E) The stop-loss order is used to buy stocks at a 10% margin.

Question 19

A market order is transacted at the:

Accepted Answer

A) lowest price of the day. 
B) best price when the order is entered. 
C) limit price. 
D) price quoted by the broker. 
E) average price of the stock on the transaction day. 
A) lowest price of the day. 
B) best price when the order is entered. 
C) limit price. 
D) price quoted by the broker. 
E) average price of the stock on the transaction day.

Question 20

Ownership in a corporation would be represented by :

Accepted Answer

A) bonds. 
B) stocks. 
C) real estate. 
D) current accounts. 
E) prospectuses. 
A) bonds. 
B) stocks. 
C) real estate. 
D) current accounts. 
E) prospectuses.

Which of the following is a difference between an exchange traded fund (ETF)and a mutual fund?

_____ is a risky short-term investment activity.

_____ involves dividing a portfolio among different classes of securities in order to preserve the capital by protecting the portfolio against negative market developments.

When you buy 300 shares of a company, you have purchased a(n):

The _____ reflects the total market value of over 98 to 99% of all publicly traded stock in the United States.

The over-the-counter market is a primary market.

The financial ratios of a company are included in its annual stockholders' report.

_____ is a process to settle disputes between a brokerage firm and its clients.

There is generally a trade-off between earning a high current income from an investment and obtaining significant capital appreciation from it.

The new securities sold in primary markets are handled by a(n):

Reviewing the amounts of income that you can realistically expect to receive from Social Security and your employee pension helps you to decide whether they will be adequate to meet your needs.

Which of the following characteristics of an investor should be evaluated to formulate an effective portfolio strategy?

A bear market condition is associated with:

When completed, an investment plan is a way of translating an abstract investment target into a specific investment program.

Instructing your broker to buy or sell a stock at a particular price is a:

The most important investment prerequisites are:

Which of the following is a characteristic of a stop-loss order?

A market order is transacted at the:

Ownership in a corporation would be represented by :

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 11: Investment Planning

Which of the following is a difference between an exchange traded fund (ETF)and a mutual fund?

_____ is a risky short-term investment activity.

_____ involves dividing a portfolio among different classes of securities in order to preserve the capital by protecting the portfolio against negative market developments.

When you buy 300 shares of a company, you have purchased a(n):

The _____ reflects the total market value of over 98 to 99% of all publicly traded stock in the United States.

The over-the-counter market is a primary market.

The financial ratios of a company are included in its annual stockholders' report.

_____ is a process to settle disputes between a brokerage firm and its clients.

There is generally a trade-off between earning a high current income from an investment and obtaining significant capital appreciation from it.

The new securities sold in primary markets are handled by a(n):

Reviewing the amounts of income that you can realistically expect to receive from Social Security and your employee pension helps you to decide whether they will be adequate to meet your needs.

Which of the following characteristics of an investor should be evaluated to formulate an effective portfolio strategy?

A bear market condition is associated with:

When completed, an investment plan is a way of translating an abstract investment target into a specific investment program.

Instructing your broker to buy or sell a stock at a particular price is a:

The most important investment prerequisites are:

Which of the following is a characteristic of a stop-loss order?

A market order is transacted at the:

Ownership in a corporation would be represented by :

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters