Question 1

If you believe that a firm will grow rapidly in the future,you should buy its

Accepted Answer

A) bonds. 
B) debentures. 
C) common stock. 
D) preferred stock. 
A) bonds. 
B) debentures. 
C) common stock. 
D) preferred stock.

Question 2

Which one thing do you always have with a common stock?

Accepted Answer

A) Dividends 
B) Voting rights 
C) Capital appreciation 
D) A guarantee of minimum par value 
A) Dividends 
B) Voting rights 
C) Capital appreciation 
D) A guarantee of minimum par value

Question 3

Describe three applications used to judge an investment's risk.Do you feel these methods give a full explanation of how investors feel about risk?

Accepted Answer

Students will discuss "range of returns,

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Bonds are certificates representing Chapterial ownership of a firm.

Accepted Answer

A) True 
 B)False

Question 6

An investment with a return of 9.5 percent,while the government rate for a similar investment is 3.5 percent,has a 6 percent risk premium.

Accepted Answer

A) True 
 B)False

Question 7

How much more will you earn on a lump sum investment of $20000 if you increase your risk tolerance to improve your return from 6 percent to 8 percent over a 20-year period?

Accepted Answer

A) $29 077 
B) $31 065 
C) $28 555 
D) $8000 
A) $29 077 
B) $31 065 
C) $28 555 
D) $8000

Question 8

If you wish to have a direct voice in the running of a company,you should purchase

Accepted Answer

A) directorships. 
B) debentures. 
C) common stock. 
D) preferred stock. 
A) directorships. 
B) debentures. 
C) common stock. 
D) preferred stock.

Question 9

Institutional investors

Accepted Answer

A) are responsible for most of the trading in financial markets. 
B) focus most of their investment decisions on less than one year. 
C) primarily select stocks using technical analysis. 
D) invest primarily in stocks rather than bonds. 
A) are responsible for most of the trading in financial markets. 
B) focus most of their investment decisions on less than one year. 
C) primarily select stocks using technical analysis. 
D) invest primarily in stocks rather than bonds.

Question 10

Describe how someone's risk tolerance directly impacts their retirement planning.Use an example to illustrate how much difference it would make if someone was a conservative investor who averaged a six percent return over 35 years on their savings versus another more aggressive investor who averaged eight percent over the same period.

Accepted Answer

Stocks are part of the investment plan a

Question 11

One of the advantages of investing in bonds is that their value is guaranteed and they pay predictable interest (coupon)payments.

Accepted Answer

A) True 
 B)False

Question 12

Explain how it is possible to add more risky assets to a portfolio and reduce the overall risk.Give a specific example of how this could be done for a conservative portfolio.

Accepted Answer

Answers will vary.However,the student ne

Question 13

Which portfolio provides the advantage of asset allocation?

Accepted Answer

A) A portfolio invested in stocks of several different countries to maximize return with less risk 
B) A portfolio invested in bonds and stocks in equal amounts to maximize return with less risk 
C) A portfolio invested in a variety of assets to maximize return with less risk 
D) A fully diversified equity portfolio eliminating unsystematic risk 
A) A portfolio invested in stocks of several different countries to maximize return with less risk 
B) A portfolio invested in bonds and stocks in equal amounts to maximize return with less risk 
C) A portfolio invested in a variety of assets to maximize return with less risk 
D) A fully diversified equity portfolio eliminating unsystematic risk

Question 14

An income trust

Accepted Answer

A) pays taxes on its earnings and then distributes the remainder of the cash flow to investors. 
B) is a good replacement for bonds in your asset allocation. 
C) is similar to a stock investment in price volatility but pays all cash flows to investors. 
D) has tax implications similar to dividends. 
A) pays taxes on its earnings and then distributes the remainder of the cash flow to investors. 
B) is a good replacement for bonds in your asset allocation. 
C) is similar to a stock investment in price volatility but pays all cash flows to investors. 
D) has tax implications similar to dividends.

Question 15

Of the following,which is not used in measuring a stock's return?

Accepted Answer

A) The price of the stock at the time of purchase 
B) The average price of stock during the period owned 
C) The price of stock at the time of sale 
D) The dividends earned during the period owned 
A) The price of the stock at the time of purchase 
B) The average price of stock during the period owned 
C) The price of stock at the time of sale 
D) The dividends earned during the period owned

Question 16

Your after tax return on your investments is 2.8 percent compounded monthly.Approximately how much will you have to save per month in order to have $80 000 in 25 years to buy a retirement cottage? Assume your investments are not tax sheltered.

Accepted Answer

A) $123 
B) $193 
C) $189 
D) $184 
A) $123 
B) $193 
C) $189 
D) $184

Question 17

You are investing a lump sum of $7200 with a goal of saving $200 000 total in 30 years.What annual interest rate on your investments would you need to reach your goal?

Accepted Answer

A) 15 percent 
B) 11.7 percent 
C) 11.3 percent 
D) 12.4 percent 
A) 15 percent 
B) 11.7 percent 
C) 11.3 percent 
D) 12.4 percent

Question 18

The returns on bond investments may come from

Accepted Answer

A) fixed coupon interest only. 
B) fixed coupon interest and bond price appreciation. 
C) fixed coupon dividend and bond price appreciation. 
D) bond price appreciation only. 
A) fixed coupon interest only. 
B) fixed coupon interest and bond price appreciation. 
C) fixed coupon dividend and bond price appreciation. 
D) bond price appreciation only.

Question 19

Stocks that provide investors with periodic income in the form of large dividends are called

Accepted Answer

A) large cap stocks. 
B) growth stocks. 
C) value stocks. 
D) income stocks. 
A) large cap stocks. 
B) growth stocks. 
C) value stocks. 
D) income stocks.

Question 20

If the market value for ABC Ltd.is $70000000 and its number of shares outstanding is $35555555 ,the value of stock per share is

Accepted Answer

A) $19.69. 
B) $1.969. 
C) $196.90. 
D) Insufficient information to answer this question 
A) $19.69. 
B) $1.969. 
C) $196.90. 
D) Insufficient information to answer this question

If you believe that a firm will grow rapidly in the future,you should buy its

Which one thing do you always have with a common stock?

Describe three applications used to judge an investment's risk.Do you feel these methods give a full explanation of how investors feel about risk?

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

Bonds are certificates representing Chapterial ownership of a firm.

An investment with a return of 9.5 percent,while the government rate for a similar investment is 3.5 percent,has a 6 percent risk premium.

How much more will you earn on a lump sum investment of $20000 if you increase your risk tolerance to improve your return from 6 percent to 8 percent over a 20-year period?

If you wish to have a direct voice in the running of a company,you should purchase

Institutional investors

One of the advantages of investing in bonds is that their value is guaranteed and they pay predictable interest (coupon)payments.

Explain how it is possible to add more risky assets to a portfolio and reduce the overall risk.Give a specific example of how this could be done for a conservative portfolio.

Which portfolio provides the advantage of asset allocation?

An income trust

Of the following,which is not used in measuring a stock's return?

Your after tax return on your investments is 2.8 percent compounded monthly.Approximately how much will you have to save per month in order to have $80 000 in 25 years to buy a retirement cottage? Assume your investments are not tax sheltered.

You are investing a lump sum of $7200 with a goal of saving $200 000 total in 30 years.What annual interest rate on your investments would you need to reach your goal?

The returns on bond investments may come from

Stocks that provide investors with periodic income in the form of large dividends are called

If the market value for ABC Ltd.is $70000000 and its number of shares outstanding is $35555555 ,the value of stock per share is

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

If you believe that a firm will grow rapidly in the future,you should buy its

Which one thing do you always have with a common stock?

Describe three applications used to judge an investment's risk.Do you feel these methods give a full explanation of how investors feel about risk?

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

Bonds are certificates representing Chapterial ownership of a firm.

An investment with a return of 9.5 percent,while the government rate for a similar investment is 3.5 percent,has a 6 percent risk premium.

How much more will you earn on a lump sum investment of $20000 if you increase your risk tolerance to improve your return from 6 percent to 8 percent over a 20-year period?

If you wish to have a direct voice in the running of a company,you should purchase

Institutional investors

One of the advantages of investing in bonds is that their value is guaranteed and they pay predictable interest (coupon)payments.

Explain how it is possible to add more risky assets to a portfolio and reduce the overall risk.Give a specific example of how this could be done for a conservative portfolio.

Which portfolio provides the advantage of asset allocation?

An income trust

Of the following,which is not used in measuring a stock's return?

Your after tax return on your investments is 2.8 percent compounded monthly.Approximately how much will you have to save per month in order to have $80 000 in 25 years to buy a retirement cottage? Assume your investments are not tax sheltered.

You are investing a lump sum of $7200 with a goal of saving $200 000 total in 30 years.What annual interest rate on your investments would you need to reach your goal?

The returns on bond investments may come from

Stocks that provide investors with periodic income in the form of large dividends are called

If the market value for ABC Ltd.is $70000000 and its number of shares outstanding is $35555555 ,the value of stock per share is

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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