Question 1

Corporate bonds

Accepted Answer

A) offer a predictable return to investors in the form of interest or coupon payments. 
B) maintain their value even in periods of changing interest rates. 
C) appreciate in value as the maturity date nears. 
D) lose value at the maturity date nears. 
A) offer a predictable return to investors in the form of interest or coupon payments. 
B) maintain their value even in periods of changing interest rates. 
C) appreciate in value as the maturity date nears. 
D) lose value at the maturity date nears.

Question 2

A company has a choice of whether to distribute dividends to common shareholders or to keep their profits in the company as retained earnings.

Accepted Answer

A) True 
 B)False

Question 3

If a stock is purchased for $30 a share and pays $5 per share in dividends a year,what selling price at the end of the year would result in a return of 50%?
(a)$60
(b)$40
(c)$35
(d)$15

Accepted Answer

(b)[(x - 3

Question 4

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. 
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.

Question 5

It would be very difficult and expensive for an individual investor to benefit from holding all 500 stocks of the Standard and Poor's 500 Index.

Accepted Answer

A) True 
 B)False

Question 6

If economic conditions deteriorate,stock prices will

Accepted Answer

A) increase. 
B) decrease. 
C) stay the same. 
D) not be directly affected by changes in economic conditions. 
A) increase. 
B) decrease. 
C) stay the same. 
D) not be directly affected by changes in economic conditions.

Question 7

Present and future value concepts are used to determine the wealth provided by an investment.

Accepted Answer

A) True 
 B)False

Question 8

To measure an investment's risk,you may use all of the following except

Accepted Answer

A) time value of money. 
B) range of returns. 
C) standard deviation of returns. 
D) subjective measures of risk. 
A) time value of money. 
B) range of returns. 
C) standard deviation of returns. 
D) subjective measures of risk.

Question 9

One advantage of investing in commercial real estate compared to stock,bonds,and mutual funds is that real estate

Accepted Answer

A) is more likely to go up in value. 
B) is more marketable. 
C) may yield income and tax advantages not available with the other investments. 
D) is less risky than the other investments. 
A) is more likely to go up in value. 
B) is more marketable. 
C) may yield income and tax advantages not available with the other investments. 
D) is less risky than the other investments.

Question 10

The higher the dividend paid by a firm,the lower its potential stock price appreciation.

Accepted Answer

A) True 
 B)False

Question 11

Real estate is a good investment option for individuals and it offers the same liquidity as stocks or bonds.

Accepted Answer

A) True 
 B)False

Question 12

Describe common stock.

Accepted Answer

All corporations issue common stock.It h

Question 13

Publicly traded indexes are not

Accepted Answer

A) purchased through a broker. 
B) investments offering only capital appreciation but no dividends. 
C) an option for small investors to have diversification of their investments. 
D) securities whose values move in tandem with a particular stock index. 
A) purchased through a broker. 
B) investments offering only capital appreciation but no dividends. 
C) an option for small investors to have diversification of their investments. 
D) securities whose values move in tandem with a particular stock index.

Question 14

You can reduce your risk by

Accepted Answer

A) diversifying your investments. 
B) having a shorter time horizon. 
C) putting all of your investment in one successful company. 
D) Both A and B are correct. 
A) diversifying your investments. 
B) having a shorter time horizon. 
C) putting all of your investment in one successful company. 
D) Both A and B are correct.

Question 15

________ investors are professionals employed by a financial institution and are responsible for managing money.

Accepted Answer

A) Institutional 
B) Professional 
C) Managing 
D) Security 
A) Institutional 
B) Professional 
C) Managing 
D) Security

Question 16

A stock's ________ is a measure of the degree of volatility in a stock's returns over time.

Accepted Answer

A) range of returns 
B) standard deviation 
C) beta 
D) value 
A) range of returns 
B) standard deviation 
C) beta 
D) value

Question 17

The timing on the sale of a stock could make a big difference in the amount of taxes that are due on the profits.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not true regarding preferred stock?

Accepted Answer

A) It gets rights to the assets of a corporation before common stock 
B) It has a stated dividend rate 
C) It has the potential for greater capital appreciation than common stock 
D) It is a safer and more conservative investment than common stock 
A) It gets rights to the assets of a corporation before common stock 
B) It has a stated dividend rate 
C) It has the potential for greater capital appreciation than common stock 
D) It is a safer and more conservative investment than common stock

Question 19

What would you pay for a stock whose price you estimate will be $50 in 10 years and you wish to earn a return on the investment of 9%? Ignore brokerage commissions and tax implications and assume the stock paid no dividends during the holding period.
(a)$45
(b)$41
(c)$21.10
(d)$15

Accepted Answer

(c)$50 × 0

Question 20

Because dividends are fixed,the prices of preferred stock are not as volatile as those of common stock.

Accepted Answer

A) True 
 B)False

Exam 14: Investing Fundamentals

Corporate bonds

A company has a choice of whether to distribute dividends to common shareholders or to keep their profits in the company as retained earnings.

If a stock is purchased for $30 a share and pays $5 per share in dividends a year,what selling price at the end of the year would result in a return of 50%? (a)$60 (b)$40 (c)$35 (d)$15

The difference between common and preferred stock is that preferred stock

It would be very difficult and expensive for an individual investor to benefit from holding all 500 stocks of the Standard and Poor's 500 Index.

If economic conditions deteriorate,stock prices will

Present and future value concepts are used to determine the wealth provided by an investment.

To measure an investment's risk,you may use all of the following except

One advantage of investing in commercial real estate compared to stock,bonds,and mutual funds is that real estate

The higher the dividend paid by a firm,the lower its potential stock price appreciation.

Real estate is a good investment option for individuals and it offers the same liquidity as stocks or bonds.

Describe common stock.

Publicly traded indexes are not

You can reduce your risk by

________ investors are professionals employed by a financial institution and are responsible for managing money.

A stock's ________ is a measure of the degree of volatility in a stock's returns over time.

The timing on the sale of a stock could make a big difference in the amount of taxes that are due on the profits.

Which of the following is not true regarding preferred stock?

What would you pay for a stock whose price you estimate will be $50 in 10 years and you wish to earn a return on the investment of 9%? Ignore brokerage commissions and tax implications and assume the stock paid no dividends during the holding period. (a)$45 (b)$41 (c)$21.10 (d)$15

Because dividends are fixed,the prices of preferred stock are not as volatile as those of common stock.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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