Question 1

The higher the tax bracket you are in,the more attractive the purchase of municipal bonds becomes.

Accepted Answer

A) True 
 B)False  True

Question 2

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement.
-You are looking for a guaranteed steady stream of income; you should invest in [stocks | bonds].

Accepted Answer

B

Question 3

A Puppy Pet Services $1,000 bond has a 7.5% coupon rate,matures in 2016 and is currently quoted at 82.The current yield is:

Accepted Answer

A)  6.15%. 
B)  7.50%. 
C)  9.15%. 
D)  10.27%. 
E)  11.43%. 
A)  6.15%. 
B)  7.50%. 
C)  9.15%. 
D)  10.27%. 
E)  11.43%. C

Question 4

At the time you buy a convertible bond,you will know the number of stock shares for which it can be exchanged.

Accepted Answer

A) True 
 B)False

Question 5

An investment is acceptable if the expected rate of return is greater than the desired rate of return.

Accepted Answer

A) True 
 B)False

Question 6

When evaluating a stock as a possible investment,one must consider:

Accepted Answer

A)  the current market price. 
B)  the expected capital gain. 
C)  the expected dividend income. 
D)  one's investment goals. 
E)  all of the above 
A)  the current market price. 
B)  the expected capital gain. 
C)  the expected dividend income. 
D)  one's investment goals. 
E)  all of the above

Question 7

Municipal bonds can be attractive investments,despite their lower interest rate,since their interest income is exempt from federal income tax.

Accepted Answer

A) True 
 B)False

Question 8

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement.
-[Cash |Stock] dividends are the most common form of dividends.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 9

The Smith family owns 200 shares of Elta stock.The company declared a 5% stock dividend.The Smiths now own:

Accepted Answer

A)  200 shares. 
B)  205 shares. 
C)  210 shares. 
D)  420 shares. 
E)  410 shares. 
A)  200 shares. 
B)  205 shares. 
C)  210 shares. 
D)  420 shares. 
E)  410 shares.

Question 10

Interest rate risk is greater for stocks than for bonds.

Accepted Answer

A) True 
 B)False

Question 11

A stocks beta is an indication of its relationship to the general market.

Accepted Answer

A) True 
 B)False

Question 12

Risk and return are _____ related.

Accepted Answer

A)  inversely 
B)  directly 
C)  slightly 
D)  oppositely 
E)  none of the above 
A)  inversely 
B)  directly 
C)  slightly 
D)  oppositely 
E)  none of the above

Question 13

Julie Johnson is in the 31 percent tax bracket.If she were to purchase a $1,000 municipal bond that had a stated interest rate of 6.5%,the taxable equivalent yield would be:

Accepted Answer

A)  6.50%. 
B)  9.03%. 
C)  9.24%. 
D)  9.42%. 
E)  10.51%. 
A)  6.50%. 
B)  9.03%. 
C)  9.24%. 
D)  9.42%. 
E)  10.51%.

Question 14

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement.
-Most publicly traded stocks represent [a liquid | an illiquid] investment.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 15

A lower expected return will mean a higher risk will have to be accepted.

Accepted Answer

A) True 
 B)False

Question 16

_____ stocks are really purchased as a gamble rather than basing our investment decision on a proven history of good performance.

Accepted Answer

A)  Blue-chip 
B)  Growth 
C)  Cyclical 
D)  Defensive 
E)  Speculative 
A)  Blue-chip 
B)  Growth 
C)  Cyclical 
D)  Defensive 
E)  Speculative

Question 17

Typically the best time to invest in the stock market is when the market is very volatile because the risk would be low.

Accepted Answer

A) True 
 B)False

Question 18

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement.
-A potential high return on an investment will signal a [high | low] risk exposure.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 19

A convertible bond is usually a:

Accepted Answer

A)  government bond. 
B)  participating bond. 
C)  debenture. 
D)  mortgage bond. 
E)  junk bond. 
A)  government bond. 
B)  participating bond. 
C)  debenture. 
D)  mortgage bond. 
E)  junk bond.

Question 20

John Smith is in the 28 percent tax bracket.If he were to purchase a $1,000 municipal bond that had a stated interest rate of 6.9%,the taxable equivalent yield would be:

Accepted Answer

A)  6.900%. 
B)  8.261%. 
C)  9.583%. 
D)  12.105%. 
E)  14.625%. 
A)  6.900%. 
B)  8.261%. 
C)  9.583%. 
D)  12.105%. 
E)  14.625%.

The higher the tax bracket you are in,the more attractive the purchase of municipal bonds becomes.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -You are looking for a guaranteed steady stream of income; you should invest in [stocks | bonds].

A Puppy Pet Services $1,000 bond has a 7.5% coupon rate,matures in 2016 and is currently quoted at 82.The current yield is:

At the time you buy a convertible bond,you will know the number of stock shares for which it can be exchanged.

An investment is acceptable if the expected rate of return is greater than the desired rate of return.

When evaluating a stock as a possible investment,one must consider:

Municipal bonds can be attractive investments,despite their lower interest rate,since their interest income is exempt from federal income tax.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -[Cash |Stock] dividends are the most common form of dividends.

The Smith family owns 200 shares of Elta stock.The company declared a 5% stock dividend.The Smiths now own:

Interest rate risk is greater for stocks than for bonds.

A stocks beta is an indication of its relationship to the general market.

Risk and return are _____ related.

Julie Johnson is in the 31 percent tax bracket.If she were to purchase a $1,000 municipal bond that had a stated interest rate of 6.5%,the taxable equivalent yield would be:

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -Most publicly traded stocks represent [a liquid | an illiquid] investment.

A lower expected return will mean a higher risk will have to be accepted.

_____ stocks are really purchased as a gamble rather than basing our investment decision on a proven history of good performance.

Typically the best time to invest in the stock market is when the market is very volatile because the risk would be low.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -A potential high return on an investment will signal a [high | low] risk exposure.

A convertible bond is usually a:

John Smith is in the 28 percent tax bracket.If he were to purchase a $1,000 municipal bond that had a stated interest rate of 6.9%,the taxable equivalent yield would be:

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Mutual Funds

Planning for Retirement

Preserving Your Estate

Filters

Exam 12: Investing in Stocks and Bonds

The higher the tax bracket you are in,the more attractive the purchase of municipal bonds becomes.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -You are looking for a guaranteed steady stream of income; you should invest in [stocks | bonds].

A Puppy Pet Services $1,000 bond has a 7.5% coupon rate,matures in 2016 and is currently quoted at 82.The current yield is:

At the time you buy a convertible bond,you will know the number of stock shares for which it can be exchanged.

An investment is acceptable if the expected rate of return is greater than the desired rate of return.

When evaluating a stock as a possible investment,one must consider:

Municipal bonds can be attractive investments,despite their lower interest rate,since their interest income is exempt from federal income tax.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -[Cash |Stock] dividends are the most common form of dividends.

The Smith family owns 200 shares of Elta stock.The company declared a 5% stock dividend.The Smiths now own:

Interest rate risk is greater for stocks than for bonds.

A stocks beta is an indication of its relationship to the general market.

Risk and return are _____ related.

Julie Johnson is in the 31 percent tax bracket.If she were to purchase a $1,000 municipal bond that had a stated interest rate of 6.5%,the taxable equivalent yield would be:

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -Most publicly traded stocks represent [a liquid | an illiquid] investment.

A lower expected return will mean a higher risk will have to be accepted.

_____ stocks are really purchased as a gamble rather than basing our investment decision on a proven history of good performance.

Typically the best time to invest in the stock market is when the market is very volatile because the risk would be low.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -A potential high return on an investment will signal a [high | low] risk exposure.

A convertible bond is usually a:

John Smith is in the 28 percent tax bracket.If he were to purchase a $1,000 municipal bond that had a stated interest rate of 6.9%,the taxable equivalent yield would be:

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Mutual Funds

Planning for Retirement

Preserving Your Estate

Filters