Question 1

Which of the following statements is true regarding the steps for effective investment planning?

Accepted Answer

A)  When establishing an investment program,you should begin by monitoring your investments.
B)  When you are choosing an investment,you should examine only the interest rate risk factor associated with each investment.
C)  When establishing an investment program,you should examine the potential return for all investments.
D)  Leave the financial planning to the professionals.
E)  There is no need to monitor your investments after you have made your investment decision.F) A) and B)
G) A) and C)

Question 2

Which of the following is a true statement regarding stock investments?

Accepted Answer

A)  A corporation generally obtains equity capital from bondholders.
B)  A corporation must issue preferred stock before issuing common stock.
C)  When a corporation is experiencing financial problems,an investor should purchase common rather than preferred stock.
D)  Corporations are required to pay dividends every year.
E)  There are no guarantees that a stock's value will go up after you purchase it.F) D) and E)
G) C) and D)

Question 3

The potential return on any investment should be directly related to the risk that the investor assumes.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following investments offers the least amount of growth potential?

Accepted Answer

A)  Real estate
B)  Common stock
C)  Mutual funds
D)  Options
E)  Preferred stockF) All of the above
G) A) and E)

Question 5

Which one of the following is false regarding mutual fund investments?

Accepted Answer

A)  Mutual funds invest in a variety of securities.
B)  Diversification provided by a mutual fund reduces risk.
C)  The goals of one mutual fund investor may differ from those of another.
D)  Since mutual fund managers are professionals,there is no need for the investor to evaluate a mutual fund.
E)  Mutual fund investments range from very conservative to extremely speculative investments.F) B) and D)
G) B) and C)

Question 6

To manage an economic crisis,many experts recommend that you manage your personal finances and your investment program with what six steps?

Accepted Answer

Here are six steps you can take to manag...

Question 7

Younger investors tend to invest a large percentage of their nest egg in growth-oriented investments.

Accepted Answer

A) True 
 B)False

Question 8

If a $1,000 bond pays 4.6% interest each year,how much would each semiannual interest payment be?

Accepted Answer

A)  $5
B)  $10
C)  $20
D)  $23
E)  $46F) B) and D)
G) A) and E)

Question 9

Which of the following is a true statement regarding investment goals?

Accepted Answer

A)  To be useful,investment goals must be written.
B)  To be useful,investment goals must be very general.
C)  Investment goals are the same for each individual.
D)  Because investment goals deal with the future,it is useless to plan more than five years in the future.
E)  A long-term investment goal involves a time period of five years or less.F) D) and E)
G) A) and B)

Question 10

For a corporation,equity capital is provided by:

Accepted Answer

A)  stockholders.
B)  lenders.
C)  bondholders.
D)  financial managers.
E)  government agencies.F) A) and B)
G) A) and C)

Question 11

The most important priority an investor in preferred stock enjoys is receiving cash dividends before common stockholders are paid any cash dividends.

Accepted Answer

A) True 
 B)False

Question 12

Allen Arnold earns $2,500 per month.He pays his mortgage,utilities,grocery and other bills and then he makes sure to set aside $100 for his savings and investment accounts before he spends money to go to movies and other personal expenses.Which suggestion for obtaining the money he needs for investing is he following?

Accepted Answer

A)  Paying himself first
B)  Taking advantage of employer-sponsored retirement programs
C)  Participating in an elective savings program
D)  Making a special effort once or twice a year to save
E)  Taking advantage of gifts,inheritance and other windfallsF) C) and E)
G) A) and B)

Question 13

The maturity dates for most bonds range between ________ years.

Accepted Answer

A)  0 to 5
B)  5 to 20
C)  10 to 20
D)  1 to 30
E)  15 to 40F) C) and D)
G) C) and E)

Question 14

Bob McDowell is thinking about buying an investment.The most important consideration when making this investment is the location of the investment.What investment is Bob thinking about purchasing?

Accepted Answer

A)  Common stock
B)  Preferred stock
C)  Corporate bond
D)  Real estate
E)  Mutual fundF) A) and B)
G) D) and E)

Question 15

A speculative investment is a high-risk investment that is made in the hope of earning a relatively large profit over a long period of time.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following features does not accurately describe a line of credit?

Accepted Answer

A)  A loan approved before the money is actually needed
B)  Funds available immediately when needed once the loan is preapproved
C)  Obtainable from a credit union,savings and loan association,or bank
D)  It has a ceiling
E)  Long-term loanF) A) and C)
G) C) and D)

Question 17

Unsuccessful products or bad corporate management may result in investors experiencing ________ risk.

Accepted Answer

A)  inflation
B)  interest rate
C)  business failure
D)  systematic
E)  incomeF) B) and E)
G) A) and C)

Question 18

Carl Reimer has just received an inheritance of $25,000 from his mother and is trying to decide how to invest it.Carl is young and earns a good salary.Carl wants to invest in a small cap mutual fund.While he won't receive much in the way of cash dividends,the companies are reinvesting significant amounts so the sales revenue and earnings in the future will be much larger.What aspect of investing is Carl most concerned about?

Accepted Answer

A)  Market risk
B)  Rate of return
C)  Diversification
D)  Liquidity
E)  Investment growthF) C) and D)
G) A) and C)

Question 19

What is the primary goal of asset allocation?

Accepted Answer

A)  Investment income
B)  Growth
C)  Liquidity
D)  Return
E)  Risk reductionF) B) and E)
G) C) and E)

Question 20

Equity capital is money:

Accepted Answer

A)  obtained from the owners of a business.
B)  borrowed through banks.
C)  obtained by employee benefit programs.
D)  that has to be repaid.
E)  that has been allocated to a retirement program.F) A) and E)
G) A) and C)

Exam 13: Investing Fundamentals

Which of the following statements is true regarding the steps for effective investment planning?

Correct Answer
verified

Which one of the following investments offers the least amount of growth potential?

Correct Answer
verified

The most important priority an investor in preferred stock enjoys is receiving cash dividends before common stockholders are paid any cash dividends.

Correct Answer
verified

Which one of the following is false regarding mutual fund investments?

Correct Answer
verified

What is the primary goal of asset allocation?

Correct Answer
verified

A speculative investment is a high-risk investment that is made in the hope of earning a relatively large profit over a long period of time.

Correct Answer
verified

If a $1,000 bond pays 4.6% interest each year,how much would each semiannual interest payment be?

Correct Answer
verified

Unsuccessful products or bad corporate management may result in investors experiencing ________ risk.

Correct Answer
verified

Which of the following is a true statement regarding investment goals?

Correct Answer
verified

Younger investors tend to invest a large percentage of their nest egg in growth-oriented investments.

Correct Answer
verified

For a corporation,equity capital is provided by:

Correct Answer
verified

Equity capital is money:

Correct Answer
verified

Correct Answer
verified

Which of the following is a true statement regarding stock investments?

Correct Answer
verified

The maturity dates for most bonds range between ________ years.

Correct Answer
verified

Correct Answer
verified

Bob McDowell is thinking about buying an investment.The most important consideration when making this investment is the location of the investment.What investment is Bob thinking about purchasing?

Correct Answer
verified

The potential return on any investment should be directly related to the risk that the investor assumes.

Correct Answer
verified

To manage an economic crisis,many experts recommend that you manage your personal finances and your investment program with what six steps?

Correct Answer
verified
Here are six steps you can take to manag...
View Answer

Which of the following features does not accurately describe a line of credit?

Correct Answer
verified

Exam 13: Investing Fundamentals

Which of the following statements is true regarding the steps for effective investment planning?

Correct AnswerverifiedShow Answer

Which one of the following investments offers the least amount of growth potential?

Correct AnswerverifiedShow Answer

The most important priority an investor in preferred stock enjoys is receiving cash dividends before common stockholders are paid any cash dividends.

Correct AnswerverifiedShow Answer

Which one of the following is false regarding mutual fund investments?

Correct AnswerverifiedShow Answer

What is the primary goal of asset allocation?

Correct AnswerverifiedShow Answer

A speculative investment is a high-risk investment that is made in the hope of earning a relatively large profit over a long period of time.

Correct AnswerverifiedShow Answer

If a $1,000 bond pays 4.6% interest each year,how much would each semiannual interest payment be?

Correct AnswerverifiedShow Answer

Unsuccessful products or bad corporate management may result in investors experiencing ________ risk.

Correct AnswerverifiedShow Answer

Which of the following is a true statement regarding investment goals?

Correct AnswerverifiedShow Answer

Younger investors tend to invest a large percentage of their nest egg in growth-oriented investments.

Correct AnswerverifiedShow Answer

For a corporation,equity capital is provided by:

Correct AnswerverifiedShow Answer

Equity capital is money:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a true statement regarding stock investments?

Correct AnswerverifiedShow Answer

The maturity dates for most bonds range between ________ years.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bob McDowell is thinking about buying an investment.The most important consideration when making this investment is the location of the investment.What investment is Bob thinking about purchasing?

Correct AnswerverifiedShow Answer

The potential return on any investment should be directly related to the risk that the investor assumes.

Correct AnswerverifiedShow Answer

To manage an economic crisis,many experts recommend that you manage your personal finances and your investment program with what six steps?

Correct AnswerverifiedHere are six steps you can take to manag...View AnswerShow Answer

Which of the following features does not accurately describe a line of credit?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Here are six steps you can take to manag...
View Answer

Correct Answer
verified