Question 1

The market for newly issued securities and initial public offerings (IPOs)is the

Accepted Answer

A) initial market. 
B) open market. 
C) primary market. 
D) secondary market. 
A) initial market. 
B) open market. 
C) primary market. 
D) secondary market. C

Question 2

Which of the following is good investment advice?

Accepted Answer

A) Set high goals and expectations for your investments even if they are unrealistic. 
B) Investing in mutual funds is an effective way to diversify if you have $200 per month to invest. 
C) If you are not getting the returns you need on your savings,select a more risky investment. 
D) If you own a stock that has dropped 50 percent in value,purchase more to average your price down. 
A) Set high goals and expectations for your investments even if they are unrealistic. 
B) Investing in mutual funds is an effective way to diversify if you have $200 per month to invest. 
C) If you are not getting the returns you need on your savings,select a more risky investment. 
D) If you own a stock that has dropped 50 percent in value,purchase more to average your price down. B

Question 3

You have invested $16 000.How long it will approximately take to accumulate $100000 at the fairly conservative rate of 6 percent?

Accepted Answer

A) 38 years 
B) 34 years 
C) 28 years 
D) 31 years 
A) 38 years 
B) 34 years 
C) 28 years 
D) 31 years D

Question 4

Research shows that sophisticated investors are able to outperform various stock indexes on average.

Accepted Answer

A) True 
 B)False

Question 5

The primary market is used by firms to raise funds and is a market where newly issued securities are traded.

Accepted Answer

A) True 
 B)False

Question 6

It is now 2030 and you have saved $250 000 since you started saving in 2007.During the same period inflation averaged 3 percent.What would your $250000 be worth in 2007 dollars?

Accepted Answer

A) $493 397 
B) $126 673 
C) $121 891 
D) $236 047 
A) $493 397 
B) $126 673 
C) $121 891 
D) $236 047

Question 7

To measure an investment's risk,which of the following would you use?

Accepted Answer

A) Time value of money 
B) Range of returns on the entire market 
C) Standard deviation of returns 
D) Standard deviation of prices 
A) Time value of money 
B) Range of returns on the entire market 
C) Standard deviation of returns 
D) Standard deviation of prices

Question 8

Mutual fund gains can be in the form of dividends,interest and/or capital gains.

Accepted Answer

A) True 
 B)False

Question 9

In December 1977 the TSX index was 1059.In December 2007 the TSX index was 11980 .What has been the approximate historical return on equities during this period?

Accepted Answer

A) 4)2 percent 
B) 10.1 percent 
C) 15.6 percent 
D) 8)4 percent 
A) 4)2 percent 
B) 10.1 percent 
C) 15.6 percent 
D) 8)4 percent

Question 10

Buying more of a stock that has just plummeted in value is an example of

Accepted Answer

A) averaging your cost base down. 
B) purchasing stocks on sale. 
C) dollar cost averaging. 
D) taking excessive risk to recover from a losing position. 
A) averaging your cost base down. 
B) purchasing stocks on sale. 
C) dollar cost averaging. 
D) taking excessive risk to recover from a losing position.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The difference between common and preferred stock is that preferred stock

Accepted Answer

A) may or may not receive dividends. 
B) has more predictable income and more safety. 
C) has greater potential for capital appreciation. 
D) is issued more frequently than common stock. 
A) may or may not receive dividends. 
B) has more predictable income and more safety. 
C) has greater potential for capital appreciation. 
D) is issued more frequently than common stock.

Question 13

You have been very risky with your investments but,having just turned 50 years of age,your investment adviser suggests you reallocate to reduce your risk.He advises you that your returns will be lower but it would be a wise move.You have saved and wish to retire with $300000.When will you be able to achieve this if the return is now 5.5 percent compounded monthly?

Accepted Answer

A) In 4.37 years 
B) In 5.5 years 
C) In 9.91 years 
D) In 1.3 years 
A) In 4.37 years 
B) In 5.5 years 
C) In 9.91 years 
D) In 1.3 years

Question 14

An investor whose income is less than $20 000 will pay more tax on capital gains than on the same amount of divided income.

Accepted Answer

A) True 
 B)False

Question 15

An investor's willingness to accept (or not accept)risk in their investments is referred to as risk intolerance.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true about mutual funds?

Accepted Answer

A) They offer a diversified portfolio of stocks to investors with specific investment objectives. 
B) Professionally managed mutual funds consistently beat the TSX index returns. 
C) Dividends received from their investments are used to pay the fund's expenses. 
D) They provide access to professional money management for a low investment. 
A) They offer a diversified portfolio of stocks to investors with specific investment objectives. 
B) Professionally managed mutual funds consistently beat the TSX index returns. 
C) Dividends received from their investments are used to pay the fund's expenses. 
D) They provide access to professional money management for a low investment.

Question 17

The standard deviation of a stock's monthly returns is an indication of its investment risk.

Accepted Answer

A) True 
 B)False

Question 18

Investing prescribed percentages in stocks,bonds,and preferred shares is a type of asset allocation.

Accepted Answer

A) True 
 B)False

Question 19

Because dividends on preferred shares are fixed,the price is not as volatile as those of common stock.

Accepted Answer

A) True 
 B)False

Question 20

If you purchase 100 shares of Ajax Corporation for $15 a share and one year later sell it for $20 a share,what was your return if the stock paid $2 per share dividends? (Ignore commissions and trading fees.Round to the nearest whole percent.)

Accepted Answer

A) 10 percent 
B) 33 percent 
C) 47 percent 
D) 40 percent 
A) 10 percent 
B) 33 percent 
C) 47 percent 
D) 40 percent

The market for newly issued securities and initial public offerings (IPOs)is the

Which of the following is good investment advice?

You have invested $16 000.How long it will approximately take to accumulate $100000 at the fairly conservative rate of 6 percent?

Research shows that sophisticated investors are able to outperform various stock indexes on average.

The primary market is used by firms to raise funds and is a market where newly issued securities are traded.

It is now 2030 and you have saved $250 000 since you started saving in 2007.During the same period inflation averaged 3 percent.What would your $250000 be worth in 2007 dollars?

To measure an investment's risk,which of the following would you use?

Mutual fund gains can be in the form of dividends,interest and/or capital gains.

In December 1977 the TSX index was 1059.In December 2007 the TSX index was 11980 .What has been the approximate historical return on equities during this period?

Buying more of a stock that has just plummeted in value is an example of

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

The difference between common and preferred stock is that preferred stock

An investor whose income is less than $20 000 will pay more tax on capital gains than on the same amount of divided income.

An investor's willingness to accept (or not accept)risk in their investments is referred to as risk intolerance.

Which of the following is true about mutual funds?

The standard deviation of a stock's monthly returns is an indication of its investment risk.

Investing prescribed percentages in stocks,bonds,and preferred shares is a type of asset allocation.

Because dividends on preferred shares are fixed,the price is not as volatile as those of common stock.

If you purchase 100 shares of Ajax Corporation for $15 a share and one year later sell it for $20 a share,what was your return if the stock paid $2 per share dividends? (Ignore commissions and trading fees.Round to the nearest whole percent.)

Tools for Financial Planning - Applying Time Value Concepts

Tools for Financial Planning - Planning with Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing,Managing and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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Exam 4: Personal Investing - Investing Fundamentals

The market for newly issued securities and initial public offerings (IPOs)is the

Which of the following is good investment advice?

You have invested $16 000.How long it will approximately take to accumulate $100000 at the fairly conservative rate of 6 percent?

Research shows that sophisticated investors are able to outperform various stock indexes on average.

The primary market is used by firms to raise funds and is a market where newly issued securities are traded.

It is now 2030 and you have saved $250 000 since you started saving in 2007.During the same period inflation averaged 3 percent.What would your $250000 be worth in 2007 dollars?

To measure an investment's risk,which of the following would you use?

Mutual fund gains can be in the form of dividends,interest and/or capital gains.

In December 1977 the TSX index was 1059.In December 2007 the TSX index was 11980 .What has been the approximate historical return on equities during this period?

Buying more of a stock that has just plummeted in value is an example of

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

The difference between common and preferred stock is that preferred stock

An investor whose income is less than $20 000 will pay more tax on capital gains than on the same amount of divided income.

An investor's willingness to accept (or not accept)risk in their investments is referred to as risk intolerance.

Which of the following is true about mutual funds?

The standard deviation of a stock's monthly returns is an indication of its investment risk.

Investing prescribed percentages in stocks,bonds,and preferred shares is a type of asset allocation.

Because dividends on preferred shares are fixed,the price is not as volatile as those of common stock.

If you purchase 100 shares of Ajax Corporation for $15 a share and one year later sell it for $20 a share,what was your return if the stock paid $2 per share dividends? (Ignore commissions and trading fees.Round to the nearest whole percent.)

Tools for Financial Planning - Applying Time Value Concepts

Tools for Financial Planning - Planning with Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing,Managing and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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