Question 1

Which of the following does not describe a growth company?

Accepted Answer

A)   The company pays a large dividend.
B)   Earnings are reinvested in the company for future growth.
C)   Earnings potential is high.
D)   Managers can solve problems associated with rapid expansion.
E)   Sales revenue is increasing.

Question 2

As investors age,their investments typically become more aggressive.

Accepted Answer

A) True 
 B)False

Question 3

If your monthly expenses total $2,000,you should save at least _______ in an emergency fund before focusing on your investment portfolio.

Accepted Answer

A)  $1,000
B)  $2,000
C)  $4,000
D)  $6,000
E)  $8,000F) $10,000

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

A valid short-term investment goal is

Accepted Answer

A)   Saving $4,000 per year for 40 years for retirement.
B)   Spending less than $500 per month for housing.
C)   Accumulating $3,000 in a savings account over the next 12 months.
D)   Using credit cards less in the next six months.
E)   Purchasing a $250,000 life insurance policy within the next four years.

Question 6

A debt security issued by a state or local government is known as a

Accepted Answer

A)   Treasury bond.
B)   Municipal bond.
C)   Corporate bond.
D)   Subordinated bond.
E)   Federal agency bond.

Question 7

The type of bond that is tracked electronically by the issuing company is a

Accepted Answer

A)   General obligation bond.
B)   Registered bond.
C)   Revenue bond.
D)   Tax-exempt bond.
E)   Zero-coupon bond.

Question 8

As people approach retirement,which of the following holds true for most?

Accepted Answer

A)   They choose more speculative investments.
B)   Their choices of investments do not change.
C)   They choose more conservative investments.
D)   They choose more risky investments.
E)   They move all of their money into certificates of deposit.

Question 9

Safe investments include all of the following except

Accepted Answer

A)   Government bonds.
B)   Savings accounts.
C)   Certificates of deposit.
D)   Certain corporate bonds.
E)   Commodities.

Question 10

According to some financial experts like Suze Orman,how much of an investment portfolio should a 30-year-old have in growth investments?

Accepted Answer

A)   30%
B)   65%
C)   70%
D)   80%
E)   100%

Question 11

What factors should be considered before making your first investment?

Accepted Answer

Before beginning an investment program,y...

Question 12

Since 1926,stocks have earned an average annual return of near 10%.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following securities are rated at various agencies?

Accepted Answer

A)   Treasury bills
B)   Treasury notes
C)   Corporate bonds
D)   Treasury bonds
E)   TIPS

Question 14

A corporate bond is a written pledge of a government or municipality to repay a specified sum of money,along with interest.

Accepted Answer

A) True 
 B)False

Question 15

The process of spreading your assets among several different types of investments to lessen risk is called

Accepted Answer

A)   Asset allocation.
B)   Asset combination.
C)   Asset investments.
D)   Asset riskiness.
E)   Asset returns.

Question 16

Inflation risk deals with

Accepted Answer

A)   A reduction in buying power.
B)   Changes in interest rates.
C)   Bad management and/or unsuccessful products.
D)   Political or social conditions.
E)   Predictable sources of income.

Question 17

Which of the following risks deals with the possibility that bad management,unsuccessful products,or other factors will cause the firm to be less profitable than originally anticipated?

Accepted Answer

A)   Inflation
B)   Interest rate
C)   Business failure
D)   Market
E)   Stock

Question 18

If your monthly expenses total $2,500,you should save at least _______ in an emergency fund before focusing on your investment portfolio.

Accepted Answer

A)  $1,000
B)  $2,500
C)  $5,000
D)  $7,500
E)  $10,000F) $12,500

Question 19

Whether you are making your own decisions or have professional help,you must consider the tax consequences of selling your investments.

Accepted Answer

A) True 
 B)False

Question 20

The value of a bond is not tied to the corporation's ability to repay its bond.

Accepted Answer

A) True 
 B)False

Exam 11: Investing Basics and Evaluating Bonds

Inflation risk deals with

Correct AnswerverifiedShow Answer

The type of bond that is tracked electronically by the issuing company is a

Correct AnswerverifiedShow Answer

As investors age,their investments typically become more aggressive.

Correct AnswerverifiedShow Answer

Which of the following does not describe a growth company?

Correct AnswerverifiedShow Answer

Since 1926,stocks have earned an average annual return of near 10%.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The value of a bond is not tied to the corporation's ability to repay its bond.

Correct AnswerverifiedShow Answer

A corporate bond is a written pledge of a government or municipality to repay a specified sum of money,along with interest.

Correct AnswerverifiedShow Answer

Safe investments include all of the following except

Correct AnswerverifiedShow Answer

Whether you are making your own decisions or have professional help,you must consider the tax consequences of selling your investments.

Correct AnswerverifiedShow Answer

A debt security issued by a state or local government is known as a

Correct AnswerverifiedShow Answer

According to some financial experts like Suze Orman,how much of an investment portfolio should a 30-year-old have in growth investments?

Correct AnswerverifiedShow Answer

Which of the following risks deals with the possibility that bad management,unsuccessful products,or other factors will cause the firm to be less profitable than originally anticipated?

Correct AnswerverifiedShow Answer

The process of spreading your assets among several different types of investments to lessen risk is called

Correct AnswerverifiedShow Answer

If your monthly expenses total $2,500,you should save at least _______ in an emergency fund before focusing on your investment portfolio.

Correct AnswerverifiedShow Answer

If your monthly expenses total $2,000,you should save at least _______ in an emergency fund before focusing on your investment portfolio.

Correct AnswerverifiedShow Answer

What factors should be considered before making your first investment?

Correct AnswerverifiedBefore beginning an investment program,y...View AnswerShow Answer

Which of the following securities are rated at various agencies?

Correct AnswerverifiedShow Answer

A valid short-term investment goal is

Correct AnswerverifiedShow Answer

As people approach retirement,which of the following holds true for most?

Correct AnswerverifiedShow Answer

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Before beginning an investment program,y...
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