Question 1

You are considering an investment in a municipal bond that has a yield of 4%. Your tax rate is 25%. What is your taxable equivalent yield?

Accepted Answer

A)  0.75% 
B)  3.75% 
C)  4% 
D)  4.25% 
E)  5.33% 
A)  0.75% 
B)  3.75% 
C)  4% 
D)  4.25% 
E)  5.33% E

Question 2

Interest paid to corporate bond owners is

Accepted Answer

A)  Tax-deductible for the investor. 
B)  Tax-deductible for the corporation. 
C)  Tax-exempt for the investor. 
D)  Tax-exempt for the corporation. 
E)  Tax-deductible for both the investor and the corporation. 
A)  Tax-deductible for the investor. 
B)  Tax-deductible for the corporation. 
C)  Tax-exempt for the investor. 
D)  Tax-exempt for the corporation. 
E)  Tax-deductible for both the investor and the corporation. B

Question 3

If a bond is quoted in the newspaper at 90, what is its price?

Accepted Answer

A)  $9.00 
B)  $90 
C)  $900 
D)  $1,000 
E)  $1,090 
A)  $9.00 
B)  $90 
C)  $900 
D)  $1,000 
E)  $1,090 C

Question 4

A security issued by the U.S. government where the principal increases with inflation and decreases with deflation is called a

Accepted Answer

A)  Treasury note. 
B)  TIPS. 
C)  SAFE. 
D)  Treasury bond. 
E)  Treasury bill. 
A)  Treasury note. 
B)  TIPS. 
C)  SAFE. 
D)  Treasury bond. 
E)  Treasury bill.

Question 5

The purpose of diversification or asset allocation is to spread your assets among several different types of investments to decrease risk.

Accepted Answer

A) True 
 B)False

Question 6

A $1,000 bond issued by ABC corporation pays a 6% rate of interest, which resulted in an annual amount of interest of $600.

Accepted Answer

A) True 
 B)False

Question 7

Market risk is associated with fluctuations in the market due to

Accepted Answer

A)  A reduction in purchasing power. 
B)  Changes in interest rates. 
C)  Bad management and/or unsuccessful products. 
D)  Economic conditions such as rapid expansion and recession. 
E)  Predictable sources of income. 
A)  A reduction in purchasing power. 
B)  Changes in interest rates. 
C)  Bad management and/or unsuccessful products. 
D)  Economic conditions such as rapid expansion and recession. 
E)  Predictable sources of income.

Question 8

The potential return on any investment should

Accepted Answer

A)  Be directly related to the risk the investor assumes. 
B)  Be inversely related to the risk of the investment. 
C)  Not have any relationship to the risk of any investment. 
D)  Be inversely related to the risk the investor assumes. 
E)  Be guaranteed. 
A)  Be directly related to the risk the investor assumes. 
B)  Be inversely related to the risk of the investment. 
C)  Not have any relationship to the risk of any investment. 
D)  Be inversely related to the risk the investor assumes. 
E)  Be guaranteed.

Question 9

Which of the following statements is correct?

Accepted Answer

A)  For the corporation, interest paid on corporate bonds is not tax-deductible. 
B)  Bond financing is seldom used to pay for a corporation's ongoing business activities. 
C)  Bonds are a form of debt financing. 
D)  Bonds do not have to be repaid at maturity. 
E)  Interest payments to bond owners are at the discretion of the corporation. 
A)  For the corporation, interest paid on corporate bonds is not tax-deductible. 
B)  Bond financing is seldom used to pay for a corporation's ongoing business activities. 
C)  Bonds are a form of debt financing. 
D)  Bonds do not have to be repaid at maturity. 
E)  Interest payments to bond owners are at the discretion of the corporation.

Question 10

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

Accepted Answer

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

Question 11

Which of the following risks reduces your purchasing power?

Accepted Answer

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

Question 12

At the least, you should keep purchase records of the actual dollar cost of your investments plus any commissions or fees paid.

Accepted Answer

A) True 
 B)False

Question 13

To help survive a financial crisis, it is important to establish a larger than usual emergency fund.

Accepted Answer

A) True 
 B)False

Question 14

Timothy Calibe purchased common stock in XYZWidgets.com. To be a successful investor, he should

Accepted Answer

A)  Buy more common stock in XYZWidgets.com. 
B)  Buy preferred stock in XYZWidgets.com. 
C)  Buy bonds in XYZWidgets.com. 
D)  Continue to evaluate his investment in XYZWidgets.com after the purchase. 
E)  Any of these would reduce his business failure risk. 
A)  Buy more common stock in XYZWidgets.com. 
B)  Buy preferred stock in XYZWidgets.com. 
C)  Buy bonds in XYZWidgets.com. 
D)  Continue to evaluate his investment in XYZWidgets.com after the purchase. 
E)  Any of these would reduce his business failure risk.

Question 15

If you invest $4,000 per year over the next 40 years for retirement, which of the following is correct?

Accepted Answer

A)  A low rate of return will give you the highest total dollar return. 
B)  A high rate of return will give you the highest total dollar return. 
C)  The rate of return doesn't matter; your total dollar return will be the same with any investment. 
D)  The length of time your money is invested does not make a difference. 
E)  Your investment will be worth $160,000 at retirement. 
A)  A low rate of return will give you the highest total dollar return. 
B)  A high rate of return will give you the highest total dollar return. 
C)  The rate of return doesn't matter; your total dollar return will be the same with any investment. 
D)  The length of time your money is invested does not make a difference. 
E)  Your investment will be worth $160,000 at retirement.

Question 16

Which of the following investments typically has the largest potential growth?

Accepted Answer

A)  Government bonds 
B)  Cash 
C)  Cash equivalents 
D)  Certificates of deposit 
E)  Stocks 
A)  Government bonds 
B)  Cash 
C)  Cash equivalents 
D)  Certificates of deposit 
E)  Stocks

Question 17

When should you consider the tax consequences of selling your investments?

Accepted Answer

A)  Only when you make your own decisions 
B)  Only when you have professional help 
C)  When the taxes due are less than $300 per transaction 
D)  When you make your own decisions or when you have professional help 
E)  When you are working with professionals and taxes due are less than $300 per transaction 
A)  Only when you make your own decisions 
B)  Only when you have professional help 
C)  When the taxes due are less than $300 per transaction 
D)  When you make your own decisions or when you have professional help 
E)  When you are working with professionals and taxes due are less than $300 per transaction

Question 18

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

Accepted Answer

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

Question 19

Which of the following is not a U.S. Treasury security?

Accepted Answer

A)  Treasury note 
B)  Treasury bond 
C)  Treasury Inflation-Protected Securities (TIPS) 
D)  Treasury stock 
E)  Treasury bill 
A)  Treasury note 
B)  Treasury bond 
C)  Treasury Inflation-Protected Securities (TIPS) 
D)  Treasury stock 
E)  Treasury bill

Question 20

Generally, interest on corporate bonds is normally paid every

Accepted Answer

A)  Month. 
B)  Three months. 
C)  Six months. 
D)  Nine months. 
E)  Year. 
A)  Month. 
B)  Three months. 
C)  Six months. 
D)  Nine months. 
E)  Year.

You are considering an investment in a municipal bond that has a yield of 4%. Your tax rate is 25%. What is your taxable equivalent yield?

Interest paid to corporate bond owners is

If a bond is quoted in the newspaper at 90, what is its price?

A security issued by the U.S. government where the principal increases with inflation and decreases with deflation is called a

The purpose of diversification or asset allocation is to spread your assets among several different types of investments to decrease risk.

A $1,000 bond issued by ABC corporation pays a 6% rate of interest, which resulted in an annual amount of interest of $600.

Market risk is associated with fluctuations in the market due to

The potential return on any investment should

Which of the following statements is correct?

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

Which of the following risks reduces your purchasing power?

At the least, you should keep purchase records of the actual dollar cost of your investments plus any commissions or fees paid.

To help survive a financial crisis, it is important to establish a larger than usual emergency fund.

Timothy Calibe purchased common stock in XYZWidgets.com. To be a successful investor, he should

If you invest $4,000 per year over the next 40 years for retirement, which of the following is correct?

Which of the following investments typically has the largest potential growth?

When should you consider the tax consequences of selling your investments?

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

Which of the following is not a U.S. Treasury security?

Generally, interest on corporate bonds is normally paid every

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

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Exam 11: Investing Fundamentals and Bonds

You are considering an investment in a municipal bond that has a yield of 4%. Your tax rate is 25%. What is your taxable equivalent yield?

Interest paid to corporate bond owners is

If a bond is quoted in the newspaper at 90, what is its price?

A security issued by the U.S. government where the principal increases with inflation and decreases with deflation is called a

The purpose of diversification or asset allocation is to spread your assets among several different types of investments to decrease risk.

A $1,000 bond issued by ABC corporation pays a 6% rate of interest, which resulted in an annual amount of interest of $600.

Market risk is associated with fluctuations in the market due to

The potential return on any investment should

Which of the following statements is correct?

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

Which of the following risks reduces your purchasing power?

At the least, you should keep purchase records of the actual dollar cost of your investments plus any commissions or fees paid.

To help survive a financial crisis, it is important to establish a larger than usual emergency fund.

Timothy Calibe purchased common stock in XYZWidgets.com. To be a successful investor, he should

If you invest $4,000 per year over the next 40 years for retirement, which of the following is correct?

Which of the following investments typically has the largest potential growth?

When should you consider the tax consequences of selling your investments?

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

Which of the following is not a U.S. Treasury security?

Generally, interest on corporate bonds is normally paid every

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters