Question 1

The amount put aside as an emergency fund should be equal to 3 to 9 months of living expenses.

Accepted Answer

A) True 
 B)False

Question 2

Dividends and interest income are taxed as long-term capital gains under the current tax laws.

Accepted Answer

A) True 
 B)False

Question 3

You're down $500 in a poker game. How much more would a conservative investor be willing to put up to win the $500 back?

Accepted Answer

A)  More than $500. 
B)  $500. 
C)  $250. 
D)  $100. 
E)  Nothing-cut your losses now 
A)  More than $500. 
B)  $500. 
C)  $250. 
D)  $100. 
E)  Nothing-cut your losses now

Question 4

Which one of the following is not a true statement?

Accepted Answer

A)  Most mutual funds invest in stocks, bonds, and other 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 to evaluate a mutual fund. 
E)  Mutual fund investments range from very conservative to very speculative investments. 
A)  Most mutual funds invest in stocks, bonds, and other 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 to evaluate a mutual fund. 
E)  Mutual fund investments range from very conservative to very speculative investments.

Question 5

The dollar value of a fixed-return investment decreases when overall interest rates in the economy decreases.

Accepted Answer

A) True 
 B)False

Question 6

All except which one of the following are good ways to acquire money for starting an investment program?

Accepted Answer

A)  Pay bills first, and then save a reasonable amount of money for investment. 
B)  Participate in an elective savings program offered by your employer. 
C)  Make a special savings effort one month per year. 
D)  Borrow money specifically for investment purposes. 
E)  Take advantage of gifts, inheritances, and windfalls. 
A)  Pay bills first, and then save a reasonable amount of money for investment. 
B)  Participate in an elective savings program offered by your employer. 
C)  Make a special savings effort one month per year. 
D)  Borrow money specifically for investment purposes. 
E)  Take advantage of gifts, inheritances, and windfalls.

Question 7

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Accepted Answer

A) True 
 B)False

Question 8

Common stock represents the most basic form of corporate ownership.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not a true statement?

Accepted Answer

A)  It is estimated that there are over 100 million Internet users worldwide. 
B)  There is a wealth of investment information available, but most small investors cannot afford to use it. 
C)  You can obtain current price information for stocks, bonds, and mutual funds by using the Internet. 
D)  A search engine is a research tool that helps you move through a menu system until you find the information you want. 
E)  Both government and businesses provide individuals with investment information. 
A)  It is estimated that there are over 100 million Internet users worldwide. 
B)  There is a wealth of investment information available, but most small investors cannot afford to use it. 
C)  You can obtain current price information for stocks, bonds, and mutual funds by using the Internet. 
D)  A search engine is a research tool that helps you move through a menu system until you find the information you want. 
E)  Both government and businesses provide individuals with investment information.

Question 10

Desktop information services provide instantaneous access to real-time historical financial data, news and many other services.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following investments would rank the highest with regard to safety?

Accepted Answer

A)  real estate 
B)  common stock 
C)  preferred stock 
D)  corporate bonds 
E)  bank accounts 
A)  real estate 
B)  common stock 
C)  preferred stock 
D)  corporate bonds 
E)  bank accounts

Question 12

Chi Min-Ho is 24 and has saved enough money to fund an adequate emergency fund. In addition, he has saved $5,600 that can be used to fund an investment program. He is single, has no dependents, and would like to retire when he is 60. Which of the investment factors listed below would be most important for an investor like Mr. Min-Ho?

Accepted Answer

A)  beta 
B)  income 
C)  growth 
D)  risk 
E)  liquidity 
A)  beta 
B)  income 
C)  growth 
D)  risk 
E)  liquidity

Question 13

Studies show that investors are willing to run a greater risk to avoid a loss than to make a gain. In behavioural finance this is called loss aversion.

Accepted Answer

A) True 
 B)False

Question 14

Potential investors should wait until they put their financial affairs in order before starting to invest.

Accepted Answer

A) True 
 B)False

Question 15

The belief that something must be of superior value because we own it, is known as the endowment effect.

Accepted Answer

A) True 
 B)False

Question 16

Capital gains and capital losses

Accepted Answer

A)  are not fully taxed. 
B)  are subject to higher taxes than is income. 
C)  are assets held for longer than two years. 
D)  are assets held for longer than five years. 
E)  are assets held for longer than ten years. 
A)  are not fully taxed. 
B)  are subject to higher taxes than is income. 
C)  are assets held for longer than two years. 
D)  are assets held for longer than five years. 
E)  are assets held for longer than ten years.

Question 17

Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.

Accepted Answer

A) True 
 B)False

Question 18

An emergency fund should

Accepted Answer

A)  be able to cover 1 month of living expense. 
B)  begin after you invest in the stock market. 
C)  consist of mutual funds primarily 
D)  be able to cover a minimum of 3 months of living expense 
E)  not be required if you have unused credit card debt. 
A)  be able to cover 1 month of living expense. 
B)  begin after you invest in the stock market. 
C)  consist of mutual funds primarily 
D)  be able to cover a minimum of 3 months of living expense 
E)  not be required if you have unused credit card debt.

Question 19

An elective savings program is when an individual cuts back on spending for one to two months to obtain additional money for investment purposes.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would not be considered a safe investment for a conservative investor?

Accepted Answer

A)  corporate bonds 
B)  guaranteed investment certificates 
C)  passbook savings accounts 
D)  blue-chip stocks 
E)  collectibles 
A)  corporate bonds 
B)  guaranteed investment certificates 
C)  passbook savings accounts 
D)  blue-chip stocks 
E)  collectibles

The amount put aside as an emergency fund should be equal to 3 to 9 months of living expenses.

Dividends and interest income are taxed as long-term capital gains under the current tax laws.

You're down $500 in a poker game. How much more would a conservative investor be willing to put up to win the $500 back?

Which one of the following is not a true statement?

The dollar value of a fixed-return investment decreases when overall interest rates in the economy decreases.

All except which one of the following are good ways to acquire money for starting an investment program?

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Common stock represents the most basic form of corporate ownership.

Which of the following is not a true statement?

Desktop information services provide instantaneous access to real-time historical financial data, news and many other services.

Which of the following investments would rank the highest with regard to safety?

Studies show that investors are willing to run a greater risk to avoid a loss than to make a gain. In behavioural finance this is called loss aversion.

Potential investors should wait until they put their financial affairs in order before starting to invest.

The belief that something must be of superior value because we own it, is known as the endowment effect.

Capital gains and capital losses

Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.

An emergency fund should

An elective savings program is when an individual cuts back on spending for one to two months to obtain additional money for investment purposes.

Which of the following would not be considered a safe investment for a conservative investor?

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters

Exam 10: Fundamentals of Investing

The amount put aside as an emergency fund should be equal to 3 to 9 months of living expenses.

Dividends and interest income are taxed as long-term capital gains under the current tax laws.

You're down $500 in a poker game. How much more would a conservative investor be willing to put up to win the $500 back?

Which one of the following is not a true statement?

The dollar value of a fixed-return investment decreases when overall interest rates in the economy decreases.

All except which one of the following are good ways to acquire money for starting an investment program?

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Common stock represents the most basic form of corporate ownership.

Which of the following is not a true statement?

Desktop information services provide instantaneous access to real-time historical financial data, news and many other services.

Which of the following investments would rank the highest with regard to safety?

Studies show that investors are willing to run a greater risk to avoid a loss than to make a gain. In behavioural finance this is called loss aversion.

Potential investors should wait until they put their financial affairs in order before starting to invest.

The belief that something must be of superior value because we own it, is known as the endowment effect.

Capital gains and capital losses

Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.

An emergency fund should

An elective savings program is when an individual cuts back on spending for one to two months to obtain additional money for investment purposes.

Which of the following would not be considered a safe investment for a conservative investor?

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters