Question 1

Investing in growth stocks usually refers to

Accepted Answer

A) younger companies paying large dividends. 
B) large companies paying large dividends. 
C) younger companies with potential for large capital gains. 
D) any company with a market expansion strategy. 
A) younger companies paying large dividends. 
B) large companies paying large dividends. 
C) younger companies with potential for large capital gains. 
D) any company with a market expansion strategy.

Question 2

An income trust

Accepted Answer

A) pays taxes on its earnings and then distributes the remainder of the cash flow to investors. 
B) is a good replacement for bonds in your asset allocation. 
C) is similar to a stock investment in price volatility but pays all cash flows to investors. 
D) has tax implications similar to dividends. 
A) pays taxes on its earnings and then distributes the remainder of the cash flow to investors. 
B) is a good replacement for bonds in your asset allocation. 
C) is similar to a stock investment in price volatility but pays all cash flows to investors. 
D) has tax implications similar to dividends.

Question 3

Describe three applications used to judge an investment's risk.Do you feel these methods give a full explanation of how investors feel about risk?

Accepted Answer

Students will discuss "range of returns,

Question 4

You are investing a lump sum of $7200 with a goal of saving $200 000 total in 30 years.What annual interest rate on your investments would you need to reach your goal?

Accepted Answer

A) 15 percent 
B) 11.7 percent 
C) 11.3 percent 
D) 12.4 percent 
A) 15 percent 
B) 11.7 percent 
C) 11.3 percent 
D) 12.4 percent

Question 5

An investment with a return of 9.5 percent,while the government rate for a similar investment is 3.5 percent,has a 6 percent risk premium.

Accepted Answer

A) True 
 B)False

Question 6

If you wish to supplement your retirement by saving $200 000 in 25 years,how much more would you have to save monthly if you saved the money outside rather than in an RRSP? Consider that investment returns should provide a yield of 8.5 percent compounded monthly and your tax rate is 30 percent,so the after tax return would be 5.95 percent.

Accepted Answer

A) $9.71 
B) $87.63 
C) $97.05 
D) $101.05 
A) $9.71 
B) $87.63 
C) $97.05 
D) $101.05

Question 7

For people in the highest marginal tax bracket,a $1000 capital gain would be taxed less than $1000 dividend income.

Accepted Answer

A) True 
 B)False

Question 8

An investor whose income is less than $20 000 will pay more tax on capital gains than on the same amount of divided income.

Accepted Answer

A) True 
 B)False

Question 9

It is now 2030 and you have saved $250 000 since you started saving in 2007.During the same period inflation averaged 3 percent.What would your $250 000 be worth in 2007 dollars?

Accepted Answer

A) $493 397 
B) $126 673 
C) $121 891 
D) $236 047 
A) $493 397 
B) $126 673 
C) $121 891 
D) $236 047

Question 10

Mutual fund gains can be in the form of dividends,interest or capital gains,which are passed on to the individual investors.

Accepted Answer

A) True 
 B)False

Question 11

One advantage of investing in your home compared to stocks,bonds,and mutual funds is

Accepted Answer

A) real estate is more likely to go up in value. 
B) only fifty percent of the capital gains are taxed. 
C) the capital gains are usually tax exempt. 
D) real estate is less risky. 
A) real estate is more likely to go up in value. 
B) only fifty percent of the capital gains are taxed. 
C) the capital gains are usually tax exempt. 
D) real estate is less risky.

Question 12

If you invest $1000 in stock that pays no dividends and sell the stock exactly one year later for $1100,what will be your return? (Ignore commissions and trading fees. )

Accepted Answer

A) 1 percent 
B) 5 percent 
C) 10 percent 
D) 100 percent 
A) 1 percent 
B) 5 percent 
C) 10 percent 
D) 100 percent

Question 13

Many more shares of stock are traded daily on the primary market than on the secondary market.

Accepted Answer

A) True 
 B)False

Question 14

The difference between common and preferred stock is that preferred stock

Accepted Answer

A) may or may not receive dividends. 
B) has predictable income and more safety. 
C) has greater potential for capital appreciation. 
D) is issued more frequently than common stock. 
A) may or may not receive dividends. 
B) has predictable income and more safety. 
C) has greater potential for capital appreciation. 
D) is issued more frequently than common stock.

Question 15

Asset allocation improves diversification,but has no effect on the risk premium of your portfolio.

Accepted Answer

A) True 
 B)False

Question 16

The standard deviation of a stock's monthly returns is an indication of its investment risk.

Accepted Answer

A) True 
 B)False

Question 17

In December 1977 the TSX index was 1059.In December 2007 the TSX index was 11 980.What has been the historical return on equities during this period?

Accepted Answer

A) 4)2 percent 
B) 10.1 percent 
C) 15.6 percent 
D) 8)4 percent 
A) 4)2 percent 
B) 10.1 percent 
C) 15.6 percent 
D) 8)4 percent

Question 18

You have been very risky with your investments but,having just turned 50 years of age,your investment adviser suggests you reallocate to reduce your risk.He advises you that your returns will be lower but it would be a wise move.You have $236 000 saved and wish to retire with $300 000.When will you be able to achieve this if the return is now 5.5 percent compounded monthly?

Accepted Answer

A) In 4.37 years 
B) In 5.5 years 
C) In 9.91 years 
D) In 1.3 years 
A) In 4.37 years 
B) In 5.5 years 
C) In 9.91 years 
D) In 1.3 years

Question 19

Owners of common stock have the right to vote on key corporate issues and have the last claim to the profits of a company.

Accepted Answer

A) True 
 B)False

Question 20

Your after tax return on your investments is 2.8 percent compounded monthly.Approximately how much will you have to save per month in order to have $80 000 in 25 years to buy a retirement cottage? Assume your investments are not tax sheltered.

Accepted Answer

A) $123 
B) $193 
C) $189 
D) $184 
A) $123 
B) $193 
C) $189 
D) $184

Investing in growth stocks usually refers to

An income trust

Describe three applications used to judge an investment's risk.Do you feel these methods give a full explanation of how investors feel about risk?

You are investing a lump sum of $7200 with a goal of saving $200 000 total in 30 years.What annual interest rate on your investments would you need to reach your goal?

An investment with a return of 9.5 percent,while the government rate for a similar investment is 3.5 percent,has a 6 percent risk premium.

For people in the highest marginal tax bracket,a $1000 capital gain would be taxed less than $1000 dividend income.

An investor whose income is less than $20 000 will pay more tax on capital gains than on the same amount of divided income.

It is now 2030 and you have saved $250 000 since you started saving in 2007.During the same period inflation averaged 3 percent.What would your $250 000 be worth in 2007 dollars?

Mutual fund gains can be in the form of dividends,interest or capital gains,which are passed on to the individual investors.

One advantage of investing in your home compared to stocks,bonds,and mutual funds is

If you invest $1000 in stock that pays no dividends and sell the stock exactly one year later for $1100,what will be your return? (Ignore commissions and trading fees. )

Many more shares of stock are traded daily on the primary market than on the secondary market.

The difference between common and preferred stock is that preferred stock

Asset allocation improves diversification,but has no effect on the risk premium of your portfolio.

The standard deviation of a stock's monthly returns is an indication of its investment risk.

In December 1977 the TSX index was 1059.In December 2007 the TSX index was 11 980.What has been the historical return on equities during this period?

Owners of common stock have the right to vote on key corporate issues and have the last claim to the profits of a company.

Your after tax return on your investments is 2.8 percent compounded monthly.Approximately how much will you have to save per month in order to have $80 000 in 25 years to buy a retirement cottage? Assume your investments are not tax sheltered.

Overview of a Financial Plan

Tools for Financial Planning - Applying Time Value Concepts

Tools for Financial Planning - Planning with Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing, Managing, and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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Exam 10: Personal Investing - Investing Fundamentals

Investing in growth stocks usually refers to

An income trust

Describe three applications used to judge an investment's risk.Do you feel these methods give a full explanation of how investors feel about risk?

You are investing a lump sum of $7200 with a goal of saving $200 000 total in 30 years.What annual interest rate on your investments would you need to reach your goal?

An investment with a return of 9.5 percent,while the government rate for a similar investment is 3.5 percent,has a 6 percent risk premium.

For people in the highest marginal tax bracket,a $1000 capital gain would be taxed less than $1000 dividend income.

An investor whose income is less than $20 000 will pay more tax on capital gains than on the same amount of divided income.

It is now 2030 and you have saved $250 000 since you started saving in 2007.During the same period inflation averaged 3 percent.What would your $250 000 be worth in 2007 dollars?

Mutual fund gains can be in the form of dividends,interest or capital gains,which are passed on to the individual investors.

One advantage of investing in your home compared to stocks,bonds,and mutual funds is

If you invest $1000 in stock that pays no dividends and sell the stock exactly one year later for $1100,what will be your return? (Ignore commissions and trading fees. )

Many more shares of stock are traded daily on the primary market than on the secondary market.

The difference between common and preferred stock is that preferred stock

Asset allocation improves diversification,but has no effect on the risk premium of your portfolio.

The standard deviation of a stock's monthly returns is an indication of its investment risk.

In December 1977 the TSX index was 1059.In December 2007 the TSX index was 11 980.What has been the historical return on equities during this period?

Owners of common stock have the right to vote on key corporate issues and have the last claim to the profits of a company.

Your after tax return on your investments is 2.8 percent compounded monthly.Approximately how much will you have to save per month in order to have $80 000 in 25 years to buy a retirement cottage? Assume your investments are not tax sheltered.

Overview of a Financial Plan

Tools for Financial Planning - Applying Time Value Concepts

Tools for Financial Planning - Planning with Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing, Managing, and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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