Question 1

Which of the following securities are rated by 4 companies?

Accepted Answer

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

Question 2

Asset allocation is the process of spreading your assets among several different types of investments to increase risk.

Accepted Answer

A) True 
 B)False

Question 3

For many people, the easiest way to begin an investment program is to participate in an employer-sponsored retirement account - often referred to as a 401(k) or a 403(b).

Accepted Answer

A) True 
 B)False

Question 4

Business failure risk can be due to

Accepted Answer

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

Question 5

Which of the following is not a true statement?

Accepted Answer

A)   The decision to start an investment plan is one you must make for yourself.
B)   To be useful, investment goals must be specific and measurable.
C)   The sooner you start an investment program, the more time your investments have to work for you.
D)   Because investment goals deal with the future, it is useless to make long-term goals.
E)   A short-term investment goal involves a period of 12 months.

Question 6

When choosing an investment, you should consider risk. The four primary risk components are

Accepted Answer

A)   Business failure, inflation, buying power, stock.
B)   Buying power, inflation, interest rate, market.
C)   Inflation, interest rate, business failure, market.
D)   Market, bond, stock, inflation.
E)   Stock, interest rate, market, buying power.

Question 7

Municipal bonds generally are only tax-exempt at the federal level.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would be considered speculative investments?

Accepted Answer

A)   Government bonds
B)   Savings accounts
C)   Certificates of deposit
D)   Certain corporate bonds
E)   Precious metals

Question 9

A discounted security means that the actual purchase price is

Accepted Answer

A)   The face value.
B)   Less than the maturity value.
C)   Greater than the face value.
D)   The value at maturity.
E)   The expected interest rate.

Question 10

A fancy way of saying you need to diversify your investments is

Accepted Answer

A)   A bird in the hand is worth two in the bush.
B)   A stitch in time saves nine.
C)   Birds of a feather flock together.
D)   Don't judge a book by its cover.
E)   Don't put all of your eggs in one basket.

Question 11

Assume that you purchase a $1,000 bond issued by Harley-Davidson that pays 6% interest each year, paid every 6 months. What is the amount of each interest payment?

Accepted Answer

A)   $3.00
B)   $6.00
C)   $30.00
D)   $60.00
E)   $1,000

Question 12

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n)  ____________ fund.

Accepted Answer

A)   serial
B)   sinking
C)   debenture
D)   indenture
E)   money

Question 13

Short-term goals should be completed in 30 or fewer days.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following does not describe a growth company?

Accepted Answer

A)   The company pays a large dividend.
B)   Profits 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 15

All of the following can be factors that influence business failure risk except

Accepted Answer

A)   Bad management.
B)   Unsuccessful products.
C)   Competition.
D)   All of the above can affect business failure risk.
E)   None of these can affect business failure risk.

Question 16

A bond backed by the full faith, credit, and unlimited taxing power of the government that issued it is called a ____________ bond.

Accepted Answer

A)   debenture
B)   mortgage
C)   secured
D)   general obligation
E)   revenue

Question 17

If you are unable to make your credit card payments, you should not contact your credit card company.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following risks associated with preferred stocks or government or corporate bonds is a result of changes in rates in the economy?

Accepted Answer

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

Question 19

Younger investors tend to invest in more growth-oriented investments than older investors.

Accepted Answer

A) True 
 B)False

Question 20

A good rule of thumb is to limit consumer credit payments to 30% of your net (after-tax) income.

Accepted Answer

A) True 
 B)False

Exam 11: Investing Fundamentals and Bonds

Which of the following is not a true statement?

Correct AnswerverifiedShow Answer

Younger investors tend to invest in more growth-oriented investments than older investors.

Correct AnswerverifiedShow Answer

Municipal bonds generally are only tax-exempt at the federal level.

Correct AnswerverifiedShow Answer

Short-term goals should be completed in 30 or fewer days.

Correct AnswerverifiedShow Answer

Which of the following securities are rated by 4 companies?

Correct AnswerverifiedShow Answer

Which of the following would be considered speculative investments?

Correct AnswerverifiedShow Answer

A bond backed by the full faith, credit, and unlimited taxing power of the government that issued it is called a ____________ bond.

Correct AnswerverifiedShow Answer

Which of the following risks associated with preferred stocks or government or corporate bonds is a result of changes in rates in the economy?

Correct AnswerverifiedShow Answer

Which of the following does not describe a growth company?

Correct AnswerverifiedShow Answer

All of the following can be factors that influence business failure risk except

Correct AnswerverifiedShow Answer

A discounted security means that the actual purchase price is

Correct AnswerverifiedShow Answer

Business failure risk can be due to

Correct AnswerverifiedShow Answer

A fancy way of saying you need to diversify your investments is

Correct AnswerverifiedShow Answer

A good rule of thumb is to limit consumer credit payments to 30% of your net (after-tax) income.

Correct AnswerverifiedShow Answer

When choosing an investment, you should consider risk. The four primary risk components are

Correct AnswerverifiedShow Answer

Asset allocation is the process of spreading your assets among several different types of investments to increase risk.

Correct AnswerverifiedShow Answer

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

For many people, the easiest way to begin an investment program is to participate in an employer-sponsored retirement account - often referred to as a 401(k) or a 403(b).

Correct AnswerverifiedShow Answer

Assume that you purchase a $1,000 bond issued by Harley-Davidson that pays 6% interest each year, paid every 6 months. What is the amount of each interest payment?

Correct AnswerverifiedShow Answer

If you are unable to make your credit card payments, you should not contact your credit card company.

Correct AnswerverifiedShow Answer

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