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Exam 13: Investing Fundamentals

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Question 61

Multiple Choice

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Which of the following is not true of mutual funds?

A) Mutual funds range from very conservative to extremely speculative investments.
B) They do not offer diversification.
C) They can be used for retirement accounts.
D) This investment provides professional management.
E) A mutual fund pools the money from many investors.

F) None of the above
G) A) and E)

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Question 62

Multiple Choice

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Which newspaper is one of the most readily available sources of information for the average investor?

A) The Wall Street Journal
B) Government publications
C) Corporate reports
D) www.google.com
E) www.yahoo.com

F) None of the above
G) A) and D)

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Question 63

Multiple Choice

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Which one of the following statements is true?

Gina Davidson has received $35,000 in a divorce settlement and is trying to decide how to invest it.She has looked at stocks but is uncertain as some stocks have lost a lot of value for their owners recently.What aspect of investing is she most concerned about?

The investment pyramid describes four levels of investment.State the name of each level and provide examples of investments at each level.

If you invest $2,000 in a stock and the stock pays you $35 in dividends each year and is worth $2,150 at the end of one year,then what is your rate of return?

The advantages of asset allocation include all of the following except:

Chris O'Donnell is thinking about investing in an investment that is high-risk in the hope of earning a relatively large profit in a short amount of time.Which investment is he most likely considering?

Potential investors should not wait until their financial affairs are in good shape before starting an investment program.

Which one of the following investments offers the least liquidity?

After the death of her husband,Gina Baker,35,received a check for $250,000 from a life insurance company.Gina has two small children and wants to make sure that both she and the children are taken care of in the future.Based on this information,which of the investment factors listed below would be the most important to Gina in her investment program?

Allison Peavy wants to invest but is worried about risk.In particular,she is worried that bad management and increased competition in the wireless phone market will make these companies less profitable than expected.What type of risk is Allison most concerned with?

Karen Johnson paid $1,000 for a corporate bond issued by an oil and gas corporation.The annual interest rate for the bond is 6 percent. a.What is the annual interest amount for this bond? b.Since the annual interest for this bond is paid every six months or semiannually,how much will Karen receive for her bond each six months? c.If comparable,new bonds pay 8 percent interest,what is the approximate market value for Karen's oil and gas bond?

The average credit card debt for a graduating college student is over:

Which one of these investments pools the money from many investors,hires a professional money manager to manage those funds,and offers diversification to investors?

Matt Jackson is single and 28 years old.He has just graduated from college with a master's degree and obtained a job making $27,500 a year.Which one of the following investments would you recommend for his long-term investment program?

Forty years ago,you began investing $2,000 a year.Because your investments earned an average of 2 percent a year,your investment portfolio has a current dollar value of $120,804.How much did you earn on your investments over the 40-year period of time?

Which one of the following investments would provide the most predictable source of income?

The amount of time that your investments have to work for you is an important factor when establishing your long-term investment program.

The rate of return on an investment has no effect on an investment program.