Question 1

Which of the following would most likely be classified as a traditional investment?

Accepted Answer

A)  Common stock issued by new corporations 
B)  Mutual funds 
C)  Corporate bonds 
D)  Market order 
E)  Savings account 
A)  Common stock issued by new corporations 
B)  Mutual funds 
C)  Corporate bonds 
D)  Market order 
E)  Savings account C

Question 2

What would cause a corporate bond with a $1,000 face value and a fixed interest rate of 7 percent to increase in value?

Accepted Answer

A)  The bond receives a lower rating by Moody's or Standard & Poor's. 
B)  Overall interest rates in the economy increase. 
C)  The government places an interest ceiling on corporate bonds. 
D)  Overall interest rates in the economy decrease. 
E)  The corporation files for protection under the bankruptcy laws. 
A)  The bond receives a lower rating by Moody's or Standard & Poor's. 
B)  Overall interest rates in the economy increase. 
C)  The government places an interest ceiling on corporate bonds. 
D)  Overall interest rates in the economy decrease. 
E)  The corporation files for protection under the bankruptcy laws. D

Question 3

Which of the following best explains the purpose of asset allocation?

Accepted Answer

A)  Reduce commission charges 
B)  Increase investment risk 
C)  Reduce government fees associated with investing 
D)  Reduce taxes paid to the IRS 
E)  Reduce investment risk 
A)  Reduce commission charges 
B)  Increase investment risk 
C)  Reduce government fees associated with investing 
D)  Reduce taxes paid to the IRS 
E)  Reduce investment risk E

Question 4

What is the name of a government security that is sold in minimum units of $100 and has maturities that may be as long as one year?

Accepted Answer

A)  Series EE savings bond 
B)  U.S.savings bond 
C)  Treasury bond 
D)  Treasury note 
E)  Treasury bill 
A)  Series EE savings bond 
B)  U.S.savings bond 
C)  Treasury bond 
D)  Treasury note 
E)  Treasury bill

Question 5

Since Mike and Carol are nearing retirement age,they are concerned with the need for their investments to provide income.If you were a financial planner,which of the following would you not recommend to Mike and Carol as an investment?

Accepted Answer

A)  Blue-chip stocks known for paying dividends 
B)  Stocks of high-growth companies 
C)  Corporate bonds 
D)  Government bonds 
E)  Certificates of deposit 
A)  Blue-chip stocks known for paying dividends 
B)  Stocks of high-growth companies 
C)  Corporate bonds 
D)  Government bonds 
E)  Certificates of deposit

Question 6

Kaitlyn purchases a $1,000 corporate bond with a fixed interest rate of 5 percent for $900.What is the most likely explanation for this apparent bargain?

Accepted Answer

A)  Overall interest rates in the economy increase. 
B)  Someone just wanted to get rid of the bond quickly. 
C)  The bond receives a better rating by Standard & Poor's or Moody's. 
D)  Overall interest rates in the economy decrease. 
E)  The company just introduced a new product. 
A)  Overall interest rates in the economy increase. 
B)  Someone just wanted to get rid of the bond quickly. 
C)  The bond receives a better rating by Standard & Poor's or Moody's. 
D)  Overall interest rates in the economy decrease. 
E)  The company just introduced a new product.

Question 7

If Martie Brown,a retiree asked for your help choosing an investment that will provide a steady source of income,which of the following would be the best for you recommend?

Accepted Answer

A)  Growth stocks 
B)  Certificates of deposit 
C)  Margin investments 
D)  Low-rated muni bonds 
E)  High-risk corporate bonds 
A)  Growth stocks 
B)  Certificates of deposit 
C)  Margin investments 
D)  Low-rated muni bonds 
E)  High-risk corporate bonds

Question 8

In order to reach goals of high dollar returns on your investments,what must you generally give up?

Accepted Answer

A)  Risk 
B)  Safety 
C)  Stocks 
D)  Money 
E)  Return 
A)  Risk 
B)  Safety 
C)  Stocks 
D)  Money 
E)  Return

Question 9

To get the proper financial counseling,Marquis and Marta Jacobs made an appointment with Harry Hanstein.Harry has had two years of training in securities,insurance,taxation,retirement planning,and estate planning and has passed a rigorous qualifying examination given by the Certified Financial Planner Board of Standards in Denver.Which of the following most narrowly describes Harry's occupation?

Accepted Answer

A)  Real estate broker 
B)  Stockbroker 
C)  Certified public accountant 
D)  Tax consultant 
E)  Certified financial planner 
A)  Real estate broker 
B)  Stockbroker 
C)  Certified public accountant 
D)  Tax consultant 
E)  Certified financial planner

Question 10

Dillon owns a $1,000 corporate bond.He receives semiannual payments of $35 for his bond.What is the bond's stated interest rate?

Accepted Answer

A)  3.5 percent 
B)  5 percent 
C)  7 percent 
D)  8 percent 
E)  10 percent 
A)  3.5 percent 
B)  5 percent 
C)  7 percent 
D)  8 percent 
E)  10 percent

Question 11

Which of the following would not satisfy the safety factor of investing?

Accepted Answer

A)  Savings accounts 
B)  Blue-chip stocks 
C)  Certificates of deposit 
D)  Highly rated municipal bonds 
E)  Antiques and collectibles 
A)  Savings accounts 
B)  Blue-chip stocks 
C)  Certificates of deposit 
D)  Highly rated municipal bonds 
E)  Antiques and collectibles

Question 12

Which of the following is not a characteristic of common stock?

Accepted Answer

A)  Shares can be sold for a capital gain if the price of the stock increases. 
B)  The firm has no legal obligation to pay dividends to stockholders. 
C)  An increase or decrease in the market value of the stock will have a corresponding effect on the value of the investment. 
D)  Each share of stock represents debt for the corporation. 
E)  Cash dividends are generally paid on a quarterly basis. 
A)  Shares can be sold for a capital gain if the price of the stock increases. 
B)  The firm has no legal obligation to pay dividends to stockholders. 
C)  An increase or decrease in the market value of the stock will have a corresponding effect on the value of the investment. 
D)  Each share of stock represents debt for the corporation. 
E)  Cash dividends are generally paid on a quarterly basis.

Question 13

What is the name given to a bond issued by a state or local government?

Accepted Answer

A)  State treasury note 
B)  State treasury bond 
C)  Corporate bond 
D)  Municipal bond 
A)  State treasury note 
B)  State treasury bond 
C)  Corporate bond 
D)  Municipal bond

Question 14

How much money do most investment counselors recommend that an individual save for an emergency fund?

Accepted Answer

A)  One month's living expenses 
B)  One month's gross salary 
C)  Two times the take-home salary 
D)  Three months' living expenses 
E)  Nine months' living expenses 
A)  One month's living expenses 
B)  One month's gross salary 
C)  Two times the take-home salary 
D)  Three months' living expenses 
E)  Nine months' living expenses

Question 15

Which of the following best describes corporate bonds?

Accepted Answer

A)  Short-term debt financing 
B)  Bank account 
C)  Long-term equity financing 
D)  Long-term debt financing 
E)  Short-term equity financing 
A)  Short-term debt financing 
B)  Bank account 
C)  Long-term equity financing 
D)  Long-term debt financing 
E)  Short-term equity financing

Question 16

Barry Ferrell has a monthly income of $2,500.His monthly expenses are $2,000.What amount is recommended for someone in Barry's situation to set aside to establish an emergency fund?

Accepted Answer

A)  $2,000 
B)  $2,500 
C)  $7,500 
D)  $6,000 
E)  $1,500 
A)  $2,000 
B)  $2,500 
C)  $7,500 
D)  $6,000 
E)  $1,500

Question 17

Which of the following is not one of the types of bonds issued by the U.S.federal government?

Accepted Answer

A)  Treasury notes 
B)  Savings bonds 
C)  Treasury municipals 
D)  Treasury bills 
A)  Treasury notes 
B)  Savings bonds 
C)  Treasury municipals 
D)  Treasury bills

Question 18

Which of the following statements is most in keeping with investment counselors' suggestions for investment goals?

Accepted Answer

A)  By January 20XX,I will have total assets of $180,000. 
B)  I want to invest to earn money with money. 
C)  In 20 years or so,I want to have $10,000 in a bank account. 
D)  I want to invest in stock that is growing. 
E)  By December 20XX or 20XX,I want to hold stocks in a Fortune 500 company. 
A)  By January 20XX,I will have total assets of $180,000. 
B)  I want to invest to earn money with money. 
C)  In 20 years or so,I want to have $10,000 in a bank account. 
D)  I want to invest in stock that is growing. 
E)  By December 20XX or 20XX,I want to hold stocks in a Fortune 500 company.

Question 19

What are the most conservative of all investments?

Accepted Answer

A)  Municipal bonds 
B)  Bank accounts 
C)  Common stocks 
D)  Corporate bonds 
E)  Mutual funds 
A)  Municipal bonds 
B)  Bank accounts 
C)  Common stocks 
D)  Corporate bonds 
E)  Mutual funds

Question 20

Jan Murphy is in her early 30s and would like some help choosing an investment that will grow over the next 10 years.Which of the following investments would you recommend for growth?

Accepted Answer

A)  Savings accounts 
B)  Corporate bonds 
C)  Municipal bonds 
D)  Common stock 
E)  Government bonds 
A)  Savings accounts 
B)  Corporate bonds 
C)  Municipal bonds 
D)  Common stock 
E)  Government bonds

Which of the following would most likely be classified as a traditional investment?

What would cause a corporate bond with a $1,000 face value and a fixed interest rate of 7 percent to increase in value?

Which of the following best explains the purpose of asset allocation?

What is the name of a government security that is sold in minimum units of $100 and has maturities that may be as long as one year?

Since Mike and Carol are nearing retirement age,they are concerned with the need for their investments to provide income.If you were a financial planner,which of the following would you not recommend to Mike and Carol as an investment?

Kaitlyn purchases a $1,000 corporate bond with a fixed interest rate of 5 percent for $900.What is the most likely explanation for this apparent bargain?

If Martie Brown,a retiree asked for your help choosing an investment that will provide a steady source of income,which of the following would be the best for you recommend?

In order to reach goals of high dollar returns on your investments,what must you generally give up?

Dillon owns a $1,000 corporate bond.He receives semiannual payments of $35 for his bond.What is the bond's stated interest rate?

Which of the following would not satisfy the safety factor of investing?

Which of the following is not a characteristic of common stock?

What is the name given to a bond issued by a state or local government?

How much money do most investment counselors recommend that an individual save for an emergency fund?

Which of the following best describes corporate bonds?

Barry Ferrell has a monthly income of $2,500.His monthly expenses are $2,000.What amount is recommended for someone in Barry's situation to set aside to establish an emergency fund?

Which of the following is not one of the types of bonds issued by the U.S.federal government?

Which of the following statements is most in keeping with investment counselors' suggestions for investment goals?

What are the most conservative of all investments?

Jan Murphy is in her early 30s and would like some help choosing an investment that will grow over the next 10 years.Which of the following investments would you recommend for growth?

Exploring the World of Business and Economics

Ethics and Social Responsibility in Business

Global Business

Choosing a Form of Business Ownership

Small Business,Entrepreneurship,and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees

Building Customer Relationships Through Effective Marketing

Creating and Pricing Products That Satisfy Customers

Distributing and Promoting Products

Exploring Social Media and E-Business

Using Management and Accounting Information

Mastering Financial Management

Enhancing Union-Management Relations

Risk Management and Insurance

Business Law regulation and Taxation

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Exam 17: Understanding Personal Finances and Investments

Which of the following would most likely be classified as a traditional investment?

What would cause a corporate bond with a $1,000 face value and a fixed interest rate of 7 percent to increase in value?

Which of the following best explains the purpose of asset allocation?

What is the name of a government security that is sold in minimum units of $100 and has maturities that may be as long as one year?

Since Mike and Carol are nearing retirement age,they are concerned with the need for their investments to provide income.If you were a financial planner,which of the following would you not recommend to Mike and Carol as an investment?

Kaitlyn purchases a $1,000 corporate bond with a fixed interest rate of 5 percent for $900.What is the most likely explanation for this apparent bargain?

If Martie Brown,a retiree asked for your help choosing an investment that will provide a steady source of income,which of the following would be the best for you recommend?

In order to reach goals of high dollar returns on your investments,what must you generally give up?

Dillon owns a $1,000 corporate bond.He receives semiannual payments of $35 for his bond.What is the bond's stated interest rate?

Which of the following would not satisfy the safety factor of investing?

Which of the following is not a characteristic of common stock?

What is the name given to a bond issued by a state or local government?

How much money do most investment counselors recommend that an individual save for an emergency fund?

Which of the following best describes corporate bonds?

Barry Ferrell has a monthly income of $2,500.His monthly expenses are $2,000.What amount is recommended for someone in Barry's situation to set aside to establish an emergency fund?

Which of the following is not one of the types of bonds issued by the U.S.federal government?

Which of the following statements is most in keeping with investment counselors' suggestions for investment goals?

What are the most conservative of all investments?

Jan Murphy is in her early 30s and would like some help choosing an investment that will grow over the next 10 years.Which of the following investments would you recommend for growth?

Exploring the World of Business and Economics

Ethics and Social Responsibility in Business

Global Business

Choosing a Form of Business Ownership

Small Business,Entrepreneurship,and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees

Building Customer Relationships Through Effective Marketing

Creating and Pricing Products That Satisfy Customers

Distributing and Promoting Products

Exploring Social Media and E-Business

Using Management and Accounting Information

Mastering Financial Management

Enhancing Union-Management Relations

Risk Management and Insurance

Business Law regulation and Taxation

Filters