Question 1

An advantage of investing in corporate bonds is that they hold their value and pay predictable interest (coupon)payments periodically.

Accepted Answer

A) True 
 B)False

Question 2

Dividends are a portion of

Accepted Answer

A)  earnings returned to the investor. 
B)  the equity returned to the investor. 
C)  liabilities returned to the company. 
D)  assets returned to the company. 
A)  earnings returned to the investor. 
B)  the equity returned to the investor. 
C)  liabilities returned to the company. 
D)  assets returned to the company.

Question 3

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 4

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 5

You have $10,000 to invest and would like to set these funds aside for retirement in 20 years.You should

Accepted Answer

A)  put the money in a money market savings account. 
B)  buy a one-year CD. 
C)  buy stocks of relatively stable firms that have low risk. 
D)  invest in a diversified stock mutual fund. 
A)  put the money in a money market savings account. 
B)  buy a one-year CD. 
C)  buy stocks of relatively stable firms that have low risk. 
D)  invest in a diversified stock mutual fund.

Question 6

Stocks that provide investors with steady income in the form of large dividends are classified as ________.

Accepted Answer

The answer of Stocks that provide investors with steady income...

Question 7

An initial public offering (IPO)is characterized by all of the following except that

Accepted Answer

A)  it is the first time offering of stock by a corporation. 
B)  it has the potential to be sold later for a profit in the secondary market. 
C)  it can result in losing the investment. 
D)  it is available to individual investors before institutional investors. 
A)  it is the first time offering of stock by a corporation. 
B)  it has the potential to be sold later for a profit in the secondary market. 
C)  it can result in losing the investment. 
D)  it is available to individual investors before institutional investors.

Question 8

Individuals who buy and sell stock on a very short-term basis as a career are called ________.

Accepted Answer

The answer of Individuals who buy and sell stock on...

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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%?

Accepted Answer

A)  $60 
B)  $40 
C)  $35 
D)  $15 
A)  $60 
B)  $40 
C)  $35 
D)  $15

Question 11

Which of the following statements is not true regarding individual investors?

Accepted Answer

A)  They commonly invest a portion of the money earned from their jobs. 
B)  They invest in stocks to earn a reasonable return on their investments. 
C)  They expect their money to grow by the time they wish to use it to make purchases. 
D)  The percentage of individual Americans who own stocks has increased since the financial crisis of 2008-2009. 
A)  They commonly invest a portion of the money earned from their jobs. 
B)  They invest in stocks to earn a reasonable return on their investments. 
C)  They expect their money to grow by the time they wish to use it to make purchases. 
D)  The percentage of individual Americans who own stocks has increased since the financial crisis of 2008-2009.

Question 12

Growth stocks tend to

Accepted Answer

A)  be those of more established companies. 
B)  offer great opportunities for capital appreciation. 
C)  pay high dividends. 
D)  be favored by more conservative investors. 
A)  be those of more established companies. 
B)  offer great opportunities for capital appreciation. 
C)  pay high dividends. 
D)  be favored by more conservative investors.

Question 13

The standard deviation of a stock's monthly returns measures the degree of volatility of a stock's returns over time and can be a method of evaluating a stock's future risk.

Accepted Answer

A) True 
 B)False

Question 14

Since the gain received from the sale of stock is always taxed as ordinary income,you might want to time your sale to shift your profit from one year to another.

Accepted Answer

A) True 
 B)False

Question 15

One of the attractive features of mutual funds is that they offer small investors a diversified portfolio and professional management.

Accepted Answer

A) True 
 B)False

Question 16

If investors were risk averse they would want to

Accepted Answer

A)  maximize the return they are receiving compared to the standard deviation of the returns on the particular security. 
B)  invest in technology stocks. 
C)  minimize risk, i.e., standard deviation, for the amount of return they are receiving on an investment. 
D)  seek the highest return they could find. 
A)  maximize the return they are receiving compared to the standard deviation of the returns on the particular security. 
B)  invest in technology stocks. 
C)  minimize risk, i.e., standard deviation, for the amount of return they are receiving on an investment. 
D)  seek the highest return they could find.

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

John decides to take his annual Christmas bonus of $2,000 and invest it each year for the next five years,in stock he believes can earn an 8% annual return.How much will John's investment be worth at the end of the five years?

Accepted Answer

A)  $11,972 
B)  $19,098 
C)  $11,734 
D)  $15,600 
A)  $11,972 
B)  $19,098 
C)  $11,734 
D)  $15,600

Question 19

If you invest $1,000 in stock that pays no dividends and sell the stock one year later for $1,100,what will be your return? (Ignore commissions and trading fees.)

Accepted Answer

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

Question 20

All of the following are true regarding stock prices except they

Accepted Answer

A)  are influenced by supply and demand. 
B)  are regulated by the Federal Reserve Board. 
C)  have no set limit. 
D)  generally increase with good financial news. 
A)  are influenced by supply and demand. 
B)  are regulated by the Federal Reserve Board. 
C)  have no set limit. 
D)  generally increase with good financial news.

Exam 14: Investing Fundamentals

An advantage of investing in corporate bonds is that they hold their value and pay predictable interest (coupon)payments periodically.

Dividends are a portion of

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

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

You have $10,000 to invest and would like to set these funds aside for retirement in 20 years.You should

Stocks that provide investors with steady income in the form of large dividends are classified as ________.

An initial public offering (IPO)is characterized by all of the following except that

Individuals who buy and sell stock on a very short-term basis as a career are called ________.

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

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%?

Which of the following statements is not true regarding individual investors?

Growth stocks tend to

The standard deviation of a stock's monthly returns measures the degree of volatility of a stock's returns over time and can be a method of evaluating a stock's future risk.

Since the gain received from the sale of stock is always taxed as ordinary income,you might want to time your sale to shift your profit from one year to another.

One of the attractive features of mutual funds is that they offer small investors a diversified portfolio and professional management.

If investors were risk averse they would want to

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

John decides to take his annual Christmas bonus of $2,000 and invest it each year for the next five years,in stock he believes can earn an 8% annual return.How much will John's investment be worth at the end of the five years?

If you invest $1,000 in stock that pays no dividends and sell the stock one year later for $1,100,what will be your return? (Ignore commissions and trading fees.)

All of the following are true regarding stock prices except they

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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