Question 1

How do you calculate rate of return? Why is this calculation important?

Accepted Answer

The rate of return is calculated by taki

Question 2

Hannah purchases shares of Disney stock. She pays for half with her own money and then borrows the other half of the money to pay for the stock. Hannah is buying stock

Accepted Answer

A)  in a low-risk manner. 
B)  on margin. 
C)  in a reckless manner. 
D)  on credit. 
E)  through mortgaging. 
A)  in a low-risk manner. 
B)  on margin. 
C)  in a reckless manner. 
D)  on credit. 
E)  through mortgaging.

Question 3

Each year, Miguel Guerra constructs a personal balance sheet to determine his

Accepted Answer

A)  cash surplus. 
B)  cash deficit. 
C)  net worth. 
D)  cash balance. 
E)  expenses. 
A)  cash surplus. 
B)  cash deficit. 
C)  net worth. 
D)  cash balance. 
E)  expenses.

Question 4

When an investor sets a maximum price a broker can spend per share, the investor is issuing a(n)

Accepted Answer

A)  market order. 
B)  price option. 
C)  limit order. 
D)  matched order. 
E)  open order. 
A)  market order. 
B)  price option. 
C)  limit order. 
D)  matched order. 
E)  open order.

Question 5

Which of the following statements is true?

Accepted Answer

A)  Common stock is a more conservative investment than preferred stock. 
B)  Dividends on preferred stock are less secure than dividends paid to common stockholders. 
C)  Preferred stockholders have a priority claim on dividends before common stockholders. 
D)  As the basic form of ownership, common stockholders receive their dividends before any other class of stock. 
E)  As the basic form of ownership, common stockholders have a priority claim on a firm's assets if the firm enters bankruptcy. 
A)  Common stock is a more conservative investment than preferred stock. 
B)  Dividends on preferred stock are less secure than dividends paid to common stockholders. 
C)  Preferred stockholders have a priority claim on dividends before common stockholders. 
D)  As the basic form of ownership, common stockholders receive their dividends before any other class of stock. 
E)  As the basic form of ownership, common stockholders have a priority claim on a firm's assets if the firm enters bankruptcy.

Question 6

Pro-future, Inc.
Sandy is a personal financial planner at Pro-future, Inc. Pro-future is a financial company that focuses on personal and business financing. When potential customers come to Sandy for financial advice, she first determines their investment goals in order to create a financial plan that fits their needs. Once she has created a suitable financial plan for a customer, Sandy gives her clients a pamphlet with suggestions for helping to accumulate the amount of money that they need.
Advice about risk is given to all of Sandy's clients. Sandy also makes strategic financial plans for each of her customers, which helps them to track and achieve their financial goals.
-Refer to Pro-future, Inc. Which of the following would Sandy explain in order to match her clients' possible investment plans with their investment goals?

Accepted Answer

A)  Secondary market 
B)  Primary country debts 
C)  Personality and temper 
D)  Risk and safety 
E)  Investment ratings 
A)  Secondary market 
B)  Primary country debts 
C)  Personality and temper 
D)  Risk and safety 
E)  Investment ratings

Question 7

What are two ways to make money on stock investments? Is one more favorable that the other?

Accepted Answer

There are primarily two ways to make mon

Question 8

Corporate bonds are a form of

Accepted Answer

A)  short-term debt financing. 
B)  bank account. 
C)  long-term equity financing. 
D)  long-term debt financing. 
E)  short-term equity financing. 
A)  short-term debt financing. 
B)  bank account. 
C)  long-term equity financing. 
D)  long-term debt financing. 
E)  short-term equity financing.

Question 9

Another name for an account executive is a

Accepted Answer

A)  brokerage member. 
B)  Securities and Exchange participant. 
C)  registered representative. 
D)  commodities representative. 
E)  Wall Street executive. 
A)  brokerage member. 
B)  Securities and Exchange participant. 
C)  registered representative. 
D)  commodities representative. 
E)  Wall Street executive.

Question 10

Describe investing in corporate bonds--what is the process of purchasing/selling, how safe or risky are they, and is this type of investing favorable to you (why or why not)?

Accepted Answer

Investing in corporate bonds involves pu

Question 11

Describe how portfolio management, asset allocation, the time your investments have to work for you, and your age affect your choice of investments.

Accepted Answer

Portfolio management, asset allocation,

Question 12

The total return you receive on an investment over a specific period of time divided by the amount invested is referred to as the

Accepted Answer

A)  rate of investment. 
B)  rate of return. 
C)  current yield. 
D)  yield to maturity. 
E)  income return. 
A)  rate of investment. 
B)  rate of return. 
C)  current yield. 
D)  yield to maturity. 
E)  income return.

Question 13

A mutual fund that sells new shares to any investor who requests them is referred to as a(n) ____ fund.

Accepted Answer

A)  net account 
B)  closed-end 
C)  open-end 
D)  load 
E)  no-load 
A)  net account 
B)  closed-end 
C)  open-end 
D)  load 
E)  no-load

Question 14

The Wall Street Journal is published

Accepted Answer

A)  twice a month. 
B)  weekly. 
C)  monthly. 
D)  on weekdays. 
E)  twice a week. 
A)  twice a month. 
B)  weekly. 
C)  monthly. 
D)  on weekdays. 
E)  twice a week.

Question 15

A government security that is sold in $100 units with a maturity of more than one year but not more than ten years is a

Accepted Answer

A)  Series EE savings bond. 
B)  U.S. savings bond. 
C)  Treasury bond. 
D)  Treasury note. 
E)  Treasury bill. 
A)  Series EE savings bond. 
B)  U.S. savings bond. 
C)  Treasury bond. 
D)  Treasury note. 
E)  Treasury bill.

Question 16

The ease with which an investment can be converted into cash is called

Accepted Answer

A)  profitability. 
B)  convertibility. 
C)  cashibility. 
D)  redemption value. 
E)  liquidity. 
A)  profitability. 
B)  convertibility. 
C)  cashibility. 
D)  redemption value. 
E)  liquidity.

Question 17

If Sara purchases 100 shares of Abercrombie and Fitch stock for $20 a share and then sells the stock for $23 per share, Sara will have a

Accepted Answer

A)  $3 dividend per share. 
B)  capital gain of $300. 
C)  capital gain of $100. 
D)  $300 decrease in the value of her stock. 
E)  total return of $3. 
A)  $3 dividend per share. 
B)  capital gain of $300. 
C)  capital gain of $100. 
D)  $300 decrease in the value of her stock. 
E)  total return of $3.

Question 18

Explain the steps involved in purchasing common stock that is listed on a national securities exchange. What role does an account executive play in completing the transaction?

Accepted Answer

The steps involved in purchasing common

Question 19

Which of the following investments is most liquid?

Accepted Answer

A)  Stocks 
B)  Real estate 
C)  Antique collectibles 
D)  Corporate bonds 
E)  Savings accounts 
A)  Stocks 
B)  Real estate 
C)  Antique collectibles 
D)  Corporate bonds 
E)  Savings accounts

Question 20

Kimberly has often invested in new biotechnology firms. She receives a booklet in the mail that contains a detailed description of a new security, the issuing biotech firm, and descriptive biographies of the firm's top managers and their experience. Kimberly received a(n)

Accepted Answer

A)  annual report. 
B)  investor service report. 
C)  stock quotation report. 
D)  prospectus. 
E)  quarterly report. 
A)  annual report. 
B)  investor service report. 
C)  stock quotation report. 
D)  prospectus. 
E)  quarterly report.

Exam 20: A: Understanding Personal Finances and Investments

How do you calculate rate of return? Why is this calculation important?

Hannah purchases shares of Disney stock. She pays for half with her own money and then borrows the other half of the money to pay for the stock. Hannah is buying stock

Each year, Miguel Guerra constructs a personal balance sheet to determine his

When an investor sets a maximum price a broker can spend per share, the investor is issuing a(n)

Which of the following statements is true?

What are two ways to make money on stock investments? Is one more favorable that the other?

Corporate bonds are a form of

Another name for an account executive is a

Describe investing in corporate bonds--what is the process of purchasing/selling, how safe or risky are they, and is this type of investing favorable to you (why or why not)?

Describe how portfolio management, asset allocation, the time your investments have to work for you, and your age affect your choice of investments.

The total return you receive on an investment over a specific period of time divided by the amount invested is referred to as the

A mutual fund that sells new shares to any investor who requests them is referred to as a(n) ____ fund.

The Wall Street Journal is published

A government security that is sold in $100 units with a maturity of more than one year but not more than ten years is a

The ease with which an investment can be converted into cash is called

If Sara purchases 100 shares of Abercrombie and Fitch stock for $20 a share and then sells the stock for $23 per share, Sara will have a

Explain the steps involved in purchasing common stock that is listed on a national securities exchange. What role does an account executive play in completing the transaction?

Which of the following investments is most liquid?

Kimberly has often invested in new biotechnology firms. She receives a booklet in the mail that contains a detailed description of a new security, the issuing biotech firm, and descriptive biographies of the firm's top managers and their experience. Kimberly received a(n)

Exploring the World of Business and Economics

A: Being Ethical and Socially Responsible

B: Being Ethical and Socially Responsible

A: Exploring Global Business

B: Exploring Global Business

Choosing a Form of Business Ownership

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Enhancing Union-Management Relations

Building Customer Relationships Through Effective Marketing

A: Creating and Pricing Products That Satisfy Customers

B: Creating and Pricing Products That Satisfy Customers

Wholesaling, Retailing, and Physical Distribution

Developing Integrated Marketing Communications

Social Media, E-Business, and Accounting

Using Management and Accounting Information

Understanding Money, Banking, and Credit

Mastering Financial Management

B: Understanding Personal Finances and Investments

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