Question 1

Investing in real estate is attractive to investors because:

Accepted Answer

A)  it is a highly liquid investment. 
B)  it permits a high degree of financial leverage. 
C)  it is exempted from taxation. 
D)  it requires very low investment. 
E)  it is highly correlated with the stock markets. 
A)  it is a highly liquid investment. 
B)  it permits a high degree of financial leverage. 
C)  it is exempted from taxation. 
D)  it requires very low investment. 
E)  it is highly correlated with the stock markets. B

Question 2

Jenny's modified adjusted gross income (MAGI) is $120,000 a year, and she owns real estate property that generates a rental income of $10,000 annually. If she pays mortgage interest of $4,000 on her property per year, she might be able to write off up to _____ in depreciation.

Accepted Answer

A)  $4,000 
B)  $10,000 
C)  $6,000 
D)  $14,000 
E)  $8,000 
A)  $4,000 
B)  $10,000 
C)  $6,000 
D)  $14,000 
E)  $8,000 C

Question 3

Closed-end mutual funds can trade at either a discount or a premium to their net asset values (NAVs).

Accepted Answer

A) True 
 B)False  True

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The actual ownership of a mutual fund is in the hands of the [ management company | shareholders ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 5

All mutual funds always charge a:

Accepted Answer

A)  transaction fee. 
B)  12b-1 fee. 
C)  management fee. 
D)  fee on the sale of the shares. 
E)  redemption fee. 
A)  transaction fee. 
B)  12b-1 fee. 
C)  management fee. 
D)  fee on the sale of the shares. 
E)  redemption fee.

Question 6

With open-end mutual funds, investors cannot lose more than they invested.

Accepted Answer

A) True 
 B)False

Question 7

Low-load funds do not charge a commission upon initial purchase.

Accepted Answer

A) True 
 B)False

Question 8

A(n) _____ is a service offered by mutual funds that enables an investor to earn a fully compounded rate of return on their investments.

Accepted Answer

A)  retirement plan 
B)  deferred withdrawal plan 
C)  automatic reinvestment plan 
D)  automatic investment plan 
E)  systemic withdrawal plan 
A)  retirement plan 
B)  deferred withdrawal plan 
C)  automatic reinvestment plan 
D)  automatic investment plan 
E)  systemic withdrawal plan

Question 9

All income from mutual funds that are not held in tax-deferred accounts is taxed at identical tax rates.

Accepted Answer

A) True 
 B)False

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The share prices of closed-end companies are determined by [ their net asset values (NAVs) only | their NAVs plus supply-and-demand conditions in the market ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 11

Which of the following statements regarding real estate investments is true?

Accepted Answer

A)  Real estate investments move in tandem with stocks. 
B)  Adding real estate to your stock portfolio increases investment diversification. 
C)  Real estate is an asset with high liquidity. 
D)  Real estate investments have less scope for financial leverage. 
E)  Real estate investments cannot depreciate. 
A)  Real estate investments move in tandem with stocks. 
B)  Adding real estate to your stock portfolio increases investment diversification. 
C)  Real estate is an asset with high liquidity. 
D)  Real estate investments have less scope for financial leverage. 
E)  Real estate investments cannot depreciate.

Question 12

A fund's objective is stated in its prospectus.

Accepted Answer

A) True 
 B)False

Question 13

Carlos holds a portfolio of stocks and bonds. He is planning to buy a real estate property worth $150,000. He can use financial leverage to make this purchase by:

Accepted Answer

A)  paying $75,000 cash in the first installment and selling shares worth $75,000 from his portfolio to pay the second installment. 
B)  taking a personal loan worth $100,000 and selling bonds worth $50,000 from his portfolio. 
C)  selling bonds from his portfolio worth $80,000 and writing a check for $70,000. 
D)  selling stocks from his portfolio worth $50,000 and paying $100,000 in cash. 
E)  paying $150,000 in cash from his savings account. 
A)  paying $75,000 cash in the first installment and selling shares worth $75,000 from his portfolio to pay the second installment. 
B)  taking a personal loan worth $100,000 and selling bonds worth $50,000 from his portfolio. 
C)  selling bonds from his portfolio worth $80,000 and writing a check for $70,000. 
D)  selling stocks from his portfolio worth $50,000 and paying $100,000 in cash. 
E)  paying $150,000 in cash from his savings account.

Question 14

The most comprehensive measure of money management costs is the _____, which includes the management fee.

Accepted Answer

A)  price/earnings (P/
E)  ratio 
B)  expense ratio 
C)  rate of return 
D)  portfolio turnover rate 
E)  ratio of net investment income to average net assets 
A)  price/earnings (P/
E)  ratio 
B)  expense ratio 
C)  rate of return 
D)  portfolio turnover rate 
E)  ratio of net investment income to average net assets

Question 15

Sector funds are often attractive to individuals wishing to avoid high exposure to risk.

Accepted Answer

A) True 
 B)False

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
A fund that invests only in utility stocks could be classified as [ an industry | a sector ] fund.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 17

A mutual fund cannot charge more than 6.5% in total sales charges and fees.

Accepted Answer

A) True 
 B)False

Question 18

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The term "mutual fund" commonly denotes [ an open-end | a closed-end ] investment company.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 19

There are more closed-end investment companies than there are open-end investment companies.

Accepted Answer

A) True 
 B)False

Question 20

In order to maximize returns, an investor should stick to investing in load funds instead of no-load funds.

Accepted Answer

A) True 
 B)False

Investing in real estate is attractive to investors because:

Jenny's modified adjusted gross income (MAGI) is $120,000 a year, and she owns real estate property that generates a rental income of $10,000 annually. If she pays mortgage interest of $4,000 on her property per year, she might be able to write off up to _____ in depreciation.

Closed-end mutual funds can trade at either a discount or a premium to their net asset values (NAVs).

All mutual funds always charge a:

With open-end mutual funds, investors cannot lose more than they invested.

Low-load funds do not charge a commission upon initial purchase.

A(n) _____ is a service offered by mutual funds that enables an investor to earn a fully compounded rate of return on their investments.

All income from mutual funds that are not held in tax-deferred accounts is taxed at identical tax rates.

Which of the following statements regarding real estate investments is true?

A fund's objective is stated in its prospectus.

Carlos holds a portfolio of stocks and bonds. He is planning to buy a real estate property worth $150,000. He can use financial leverage to make this purchase by:

The most comprehensive measure of money management costs is the _____, which includes the management fee.

Sector funds are often attractive to individuals wishing to avoid high exposure to risk.

A mutual fund cannot charge more than 6.5% in total sales charges and fees.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. The term "mutual fund" commonly denotes [ an open-end | a closed-end ] investment company.

There are more closed-end investment companies than there are open-end investment companies.

In order to maximize returns, an investor should stick to investing in load funds instead of no-load funds.

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

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

Investment Planning

Investing in Stocks and Bonds

Planning for Retirement

Preserving Your Estate

Filters

Exam 13: Investing in Mutual Funds and Real Estate

Investing in real estate is attractive to investors because:

Jenny's modified adjusted gross income (MAGI) is $120,000 a year, and she owns real estate property that generates a rental income of $10,000 annually. If she pays mortgage interest of $4,000 on her property per year, she might be able to write off up to _____ in depreciation.

Closed-end mutual funds can trade at either a discount or a premium to their net asset values (NAVs).

All mutual funds always charge a:

With open-end mutual funds, investors cannot lose more than they invested.

Low-load funds do not charge a commission upon initial purchase.

A(n) _____ is a service offered by mutual funds that enables an investor to earn a fully compounded rate of return on their investments.

All income from mutual funds that are not held in tax-deferred accounts is taxed at identical tax rates.

Which of the following statements regarding real estate investments is true?

A fund's objective is stated in its prospectus.

Carlos holds a portfolio of stocks and bonds. He is planning to buy a real estate property worth $150,000. He can use financial leverage to make this purchase by:

The most comprehensive measure of money management costs is the _____, which includes the management fee.

Sector funds are often attractive to individuals wishing to avoid high exposure to risk.

A mutual fund cannot charge more than 6.5% in total sales charges and fees.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. The term "mutual fund" commonly denotes [ an open-end | a closed-end ] investment company.

There are more closed-end investment companies than there are open-end investment companies.

In order to maximize returns, an investor should stick to investing in load funds instead of no-load funds.

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

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

Investment Planning

Investing in Stocks and Bonds

Planning for Retirement

Preserving Your Estate

Filters