Question 1

Which of the following investments has the lowest risk?

Accepted Answer

A) T-bills 
B) Municipal bonds 
C) Income stocks 
D) Real estate 
A) T-bills 
B) Municipal bonds 
C) Income stocks 
D) Real estate

Question 2

A risk premium constitutes the difference between the riskier investment's return and the totally safe return on the T-bill.

Accepted Answer

A) True 
 B)False

Question 3

People seeking moderate returns should consider investing in

Accepted Answer

A) dividend-paying common stock. 
B) growth and income mutual funds. 
C) high-quality corporate bonds. 
D) (Any of these) 
A) dividend-paying common stock. 
B) growth and income mutual funds. 
C) high-quality corporate bonds. 
D) (Any of these)

Question 4

The largest portion of return on equity investments normally comes from capital gains as opposed to dividend income.

Accepted Answer

A) True 
 B)False

Question 5

The more efficient a market for investments the easier it is to find bargains.

Accepted Answer

A) True 
 B)False

Question 6

The after-tax return is the net amount remaining after selling the investment and subtracting the

Accepted Answer

A) initial cost. 
B) selling expenses. 
C) income taxes. 
D) (All of these) 
A) initial cost. 
B) selling expenses. 
C) income taxes. 
D) (All of these)

Question 7

Leverage is the speed and ease with which an investment can be converted to cash.

Accepted Answer

A) True 
 B)False

Question 8

Alexis and Maxwell have decided to invest their investment dollars: 40 percent in stocks,30 percent in bonds,and 30 percent in cash equivalents.Over the past year,the market value of their bonds increased while the market value of their stocks declined.Using the asset allocation model,they should now

Accepted Answer

A) use some of their cash equivalents to buy more bonds. 
B) use some of their cash equivalents to buy more stocks. 
C) sell some of their stocks and buy more bonds. 
D) sell some of their bonds and buy more stocks. 
A) use some of their cash equivalents to buy more bonds. 
B) use some of their cash equivalents to buy more stocks. 
C) sell some of their stocks and buy more bonds. 
D) sell some of their bonds and buy more stocks.

Question 9

A long-term investor can purchase a small number of extra shares in a company in a convenient,systematic,and inexpensive way through dividend reinvestment plans.

Accepted Answer

A) True 
 B)False

Question 10

Your risk tolerance is your ability to weather changes in the values of your investments.

Accepted Answer

A) True 
 B)False

Question 11

Successful use of dollar-cost averaging requires investor

Accepted Answer

A) discipline. 
B) knowledge. 
C) luck. 
D) timing. 
A) discipline. 
B) knowledge. 
C) luck. 
D) timing.

Question 12

When investing,you want to select a portfolio of investments that will provide the necessary potential total return through current income and capital gains in the proportions that you desire.

Accepted Answer

A) True 
 B)False

Question 13

If you choose to strive for a very high return by accepting a high level of risk,you could be characterized as a risk seeker.

Accepted Answer

A) True 
 B)False

Question 14

The investment strategy that requires the percentage of dollars invested in stocks,bonds,and cash to remain fixed over a long period of time is called

Accepted Answer

A) the buy-and-hold approach. 
B) dollar-cost averaging. 
C) asset allocation. 
D) portfolio diversification. 
A) the buy-and-hold approach. 
B) dollar-cost averaging. 
C) asset allocation. 
D) portfolio diversification.

Question 15

Most returns earned are derived from owning the right asset categories rather than specific investments.

Accepted Answer

A) True 
 B)False

Question 16

The last step in the investment planning process is to decide on what actions to take.

Accepted Answer

A) True 
 B)False

Question 17

With a(n) ____ investment,the borrower agrees to pay the investor a specific rate of return for use of the principal.

Accepted Answer

A) fixed maturity 
B) fixed income 
C) debt 
D) equity 
A) fixed maturity 
B) fixed income 
C) debt 
D) equity

Question 18

The average length of a bull market is ____ months,whereas the average length of a bear market is ____ months.

Accepted Answer

A) 10; 25 
B) 25; 10 
C) 14; 33 
D) 55; 9 
A) 10; 25 
B) 25; 10 
C) 14; 33 
D) 55; 9

Question 19

Which of the following would not be considered as securities?

Accepted Answer

A) stocks 
B) real estate 
C) mutual funds 
D) bonds 
A) stocks 
B) real estate 
C) mutual funds 
D) bonds

Question 20

Investors who do not want to lose any of the money that they have invested are most interested in

Accepted Answer

A) preservation of capital. 
B) income stocks. 
C) liquidity. 
D) leverage. 
A) preservation of capital. 
B) income stocks. 
C) liquidity. 
D) leverage.

Which of the following investments has the lowest risk?

A risk premium constitutes the difference between the riskier investment's return and the totally safe return on the T-bill.

People seeking moderate returns should consider investing in

The largest portion of return on equity investments normally comes from capital gains as opposed to dividend income.

The more efficient a market for investments the easier it is to find bargains.

The after-tax return is the net amount remaining after selling the investment and subtracting the

Leverage is the speed and ease with which an investment can be converted to cash.

A long-term investor can purchase a small number of extra shares in a company in a convenient,systematic,and inexpensive way through dividend reinvestment plans.

Your risk tolerance is your ability to weather changes in the values of your investments.

Successful use of dollar-cost averaging requires investor

When investing,you want to select a portfolio of investments that will provide the necessary potential total return through current income and capital gains in the proportions that you desire.

If you choose to strive for a very high return by accepting a high level of risk,you could be characterized as a risk seeker.

The investment strategy that requires the percentage of dollars invested in stocks,bonds,and cash to remain fixed over a long period of time is called

Most returns earned are derived from owning the right asset categories rather than specific investments.

The last step in the investment planning process is to decide on what actions to take.

With a(n) ____ investment,the borrower agrees to pay the investor a specific rate of return for use of the principal.

The average length of a bull market is months,whereas the average length of a bear market is months.

Which of the following would not be considered as securities?

Investors who do not want to lose any of the money that they have invested are most interested in

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters

Exam 13: Investment Fundamentals

Which of the following investments has the lowest risk?

A risk premium constitutes the difference between the riskier investment's return and the totally safe return on the T-bill.

People seeking moderate returns should consider investing in

The largest portion of return on equity investments normally comes from capital gains as opposed to dividend income.

The more efficient a market for investments the easier it is to find bargains.

The after-tax return is the net amount remaining after selling the investment and subtracting the

Leverage is the speed and ease with which an investment can be converted to cash.

A long-term investor can purchase a small number of extra shares in a company in a convenient,systematic,and inexpensive way through dividend reinvestment plans.

Your risk tolerance is your ability to weather changes in the values of your investments.

Successful use of dollar-cost averaging requires investor

When investing,you want to select a portfolio of investments that will provide the necessary potential total return through current income and capital gains in the proportions that you desire.

If you choose to strive for a very high return by accepting a high level of risk,you could be characterized as a risk seeker.

The investment strategy that requires the percentage of dollars invested in stocks,bonds,and cash to remain fixed over a long period of time is called

Most returns earned are derived from owning the right asset categories rather than specific investments.

The last step in the investment planning process is to decide on what actions to take.

With a(n) ____ investment,the borrower agrees to pay the investor a specific rate of return for use of the principal.

The average length of a bull market is ____ months,whereas the average length of a bear market is ____ months.

Which of the following would not be considered as securities?

Investors who do not want to lose any of the money that they have invested are most interested in

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters

The average length of a bull market is months,whereas the average length of a bear market is months.