Question 1

What makes up the interest rate risk?

Accepted Answer

The inflation risk premium is the rate i

Question 2

Tran purchased a house for a rental property for $100,000 five years ago. During the time he owned this rental, his net rental income was a total of $4,000. He just sold the property for $120,000. What was his average annual return on this investment?

Accepted Answer

A)  4.0% 
B)  4.8% 
C)  20% 
D)  24% 
A)  4.0% 
B)  4.8% 
C)  20% 
D)  24%

Question 3

On the TV show "The Big Bang Theory" the main characters are frequently seen purchasing comic books. Purchasing rare comic books is an example of investing.

Accepted Answer

A) True 
 B)False

Question 4

While studying the chapter on investments in Personal Finance, Becky Hargrith found out that the ________ is equal to the real rate of return plus the rate of inflation.

Accepted Answer

A)  adjusted rate 
B)  long-term rate of return 
C)  nominal interest rate 
D)  real interest rate 
A)  adjusted rate 
B)  long-term rate of return 
C)  nominal interest rate 
D)  real interest rate

Question 5

Historical rates of return for the last 82 years place ________ at the highest end of the spectrum for risk and ________ at the lowest end for risk.

Accepted Answer

A)  common stocks; T-Bills 
B)  common stocks; long-term government bonds 
C)  common stocks; long-term corporate bonds 
D)  long-term corporate bonds; long-term government bonds 
A)  common stocks; T-Bills 
B)  common stocks; long-term government bonds 
C)  common stocks; long-term corporate bonds 
D)  long-term corporate bonds; long-term government bonds

Question 6

If the total rate of return is multiplied by 1/N, where N is the number of years for which the investment was held, the result is the ________.

Accepted Answer

A)  serialized rate of return 
B)  annualized rate of return 
C)  tax-free rate of return 
D)  capitalized rate of return 
A)  serialized rate of return 
B)  annualized rate of return 
C)  tax-free rate of return 
D)  capitalized rate of return

Question 7

Explain the concept of liquidity relating to personal financial planning.

Accepted Answer

Part of the risk-return tradeoff is the

Question 8

A prerequisite to investing is to perform a financial reality check. Explain its 3 parts.

Accepted Answer

Balance your budget.If you do not live w

Question 9

An efficient market is one in which all relevant information about the stock is reflected in the stock price.

Accepted Answer

A) True 
 B)False

Question 10

A young investor who is averse to risk should invest their money in government bonds.

Accepted Answer

A) True 
 B)False

Question 11

The nominal rate of return is simply the real rate of return minus the inflation rate.

Accepted Answer

A) True 
 B)False

Question 12

Describe the sources of risk in the risk-return trade off.

Accepted Answer

The interest rate risk is the risk of fl

Question 13

Changes in the capital gains tax rate, or in the tax deductibility on municipal bonds are examples of ________ risk.

Accepted Answer

A)  inflation 
B)  political and regulatory 
C)  interest rate 
D)  exchange rate risk 
E)  none of the above 
A)  inflation 
B)  political and regulatory 
C)  interest rate 
D)  exchange rate risk 
E)  none of the above

Question 14

Because Nancy is extremely risk averse she is less likely to receive a solid rate of return on her investment portfolio than Babby who is more accepting of a risky portfolio.

Accepted Answer

A) True 
 B)False

Question 15

Investing in assets such as collectable Barbie Dolls or Beanie Babies are both example of speculating.

Accepted Answer

A) True 
 B)False

Question 16

For individuals in their golden years who are approaching retirement, a mix of ________ percent common stocks and ________ percent bonds is a relatively common recommendation from financial planners.

Accepted Answer

A)  20, 80 
B)  80, 20 
C)  40, 60 
D)  60, 40 
E)  none of the above 
A)  20, 80 
B)  80, 20 
C)  40, 60 
D)  60, 40 
E)  none of the above

Question 17

As a young college graduate, your biggest investment ally is ________.

Accepted Answer

A)  leverage 
B)  a windfall 
C)  tax-free investments 
D)  time 
E)  derivatives 
A)  leverage 
B)  a windfall 
C)  tax-free investments 
D)  time 
E)  derivatives

Question 18

Albert just purchased a $1,000, 5.4%, 10-year bond when he heard about his friend Charlie who just bought a $1,000; 8%, 10-year bond. What kind of risk did Albert just experience?

Accepted Answer

A)  interest rate 
B)  market 
C)  financial 
D)  business 
A)  interest rate 
B)  market 
C)  financial 
D)  business

Question 19

The risk associated with the use of debt by the firm is business risk.

Accepted Answer

A) True 
 B)False

Question 20

Tell how your understanding of efficient markets helps with investing.

Accepted Answer

My understanding tells me several things

What makes up the interest rate risk?

Tran purchased a house for a rental property for $100,000 five years ago. During the time he owned this rental, his net rental income was a total of $4,000. He just sold the property for $120,000. What was his average annual return on this investment?

On the TV show "The Big Bang Theory" the main characters are frequently seen purchasing comic books. Purchasing rare comic books is an example of investing.

While studying the chapter on investments in Personal Finance, Becky Hargrith found out that the ________ is equal to the real rate of return plus the rate of inflation.

Historical rates of return for the last 82 years place at the highest end of the spectrum for risk and at the lowest end for risk.

If the total rate of return is multiplied by 1/N, where N is the number of years for which the investment was held, the result is the ________.

Explain the concept of liquidity relating to personal financial planning.

A prerequisite to investing is to perform a financial reality check. Explain its 3 parts.

An efficient market is one in which all relevant information about the stock is reflected in the stock price.

A young investor who is averse to risk should invest their money in government bonds.

The nominal rate of return is simply the real rate of return minus the inflation rate.

Describe the sources of risk in the risk-return trade off.

Changes in the capital gains tax rate, or in the tax deductibility on municipal bonds are examples of ________ risk.

Because Nancy is extremely risk averse she is less likely to receive a solid rate of return on her investment portfolio than Babby who is more accepting of a risky portfolio.

Investing in assets such as collectable Barbie Dolls or Beanie Babies are both example of speculating.

For individuals in their golden years who are approaching retirement, a mix of percent common stocks and percent bonds is a relatively common recommendation from financial planners.

As a young college graduate, your biggest investment ally is ________.

Albert just purchased a $1,000, 5.4%, 10-year bond when he heard about his friend Charlie who just bought a $1,000; 8%, 10-year bond. What kind of risk did Albert just experience?

The risk associated with the use of debt by the firm is business risk.

Tell how your understanding of efficient markets helps with investing.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 11: Investment Basics

What makes up the interest rate risk?

Tran purchased a house for a rental property for $100,000 five years ago. During the time he owned this rental, his net rental income was a total of $4,000. He just sold the property for $120,000. What was his average annual return on this investment?

On the TV show "The Big Bang Theory" the main characters are frequently seen purchasing comic books. Purchasing rare comic books is an example of investing.

While studying the chapter on investments in Personal Finance, Becky Hargrith found out that the ________ is equal to the real rate of return plus the rate of inflation.

Historical rates of return for the last 82 years place ________ at the highest end of the spectrum for risk and ________ at the lowest end for risk.

If the total rate of return is multiplied by 1/N, where N is the number of years for which the investment was held, the result is the ________.

Explain the concept of liquidity relating to personal financial planning.

A prerequisite to investing is to perform a financial reality check. Explain its 3 parts.

An efficient market is one in which all relevant information about the stock is reflected in the stock price.

A young investor who is averse to risk should invest their money in government bonds.

The nominal rate of return is simply the real rate of return minus the inflation rate.

Describe the sources of risk in the risk-return trade off.

Changes in the capital gains tax rate, or in the tax deductibility on municipal bonds are examples of ________ risk.

Because Nancy is extremely risk averse she is less likely to receive a solid rate of return on her investment portfolio than Babby who is more accepting of a risky portfolio.

Investing in assets such as collectable Barbie Dolls or Beanie Babies are both example of speculating.

For individuals in their golden years who are approaching retirement, a mix of ________ percent common stocks and ________ percent bonds is a relatively common recommendation from financial planners.

As a young college graduate, your biggest investment ally is ________.

Albert just purchased a $1,000, 5.4%, 10-year bond when he heard about his friend Charlie who just bought a $1,000; 8%, 10-year bond. What kind of risk did Albert just experience?

The risk associated with the use of debt by the firm is business risk.

Tell how your understanding of efficient markets helps with investing.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Historical rates of return for the last 82 years place at the highest end of the spectrum for risk and at the lowest end for risk.

For individuals in their golden years who are approaching retirement, a mix of percent common stocks and percent bonds is a relatively common recommendation from financial planners.