Question 1

Diversifying your investments could even protect you to some degree from the problems associated with insider trading.

Accepted Answer

A) True 
 B)False

Question 2

Selling options on stock you already own

Accepted Answer

A) is illegal under federal law. 
B) cannot benefit you financially. 
C) is called a covered call strategy. 
D) is not a very good idea. 
A) is illegal under federal law. 
B) cannot benefit you financially. 
C) is called a covered call strategy. 
D) is not a very good idea.

Question 3

A put option is purchased for a premium of $200 with an exercise price of $38 per share and a current market price on the stock of $41 per share.What would be the return if the market price declines to $35 per share and the stock is purchased and the option exercised? Ignore taxes and brokerage commissions.Round to the nearest percentage if necessary.
(a)9 percent
(b)15 percent
(c)50 percent
(d)100 percent

Accepted Answer

The answer of A put option is purchased for a...

Question 4

Most investors put a heavy emphasis on stocks at an early stage in life and gradually shift toward bonds or stocks of stable firms that pay high dividends later in life.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following will increase the premium on a call option?

Accepted Answer

A) It is out of money 
B) It will expire in 72 hour 
C) It is on a very volatile stock 
D) It is covered by a put 
A) It is out of money 
B) It will expire in 72 hour 
C) It is on a very volatile stock 
D) It is covered by a put

Question 6

Because foreign stocks can produce such high returns,many investment advisers recommend that you invest about 45% of your portfolio in these stocks.

Accepted Answer

A) True 
 B)False

Question 7

In compiling a portfolio,which of the following should you not consider?

Accepted Answer

A) Investments that exhibit a high positive correlation 
B) Investments whose values are not influenced by similar conditions 
C) Negatively correlated investments 
D) Investments whose reaction to economic conditions will not be similar 
A) Investments that exhibit a high positive correlation 
B) Investments whose values are not influenced by similar conditions 
C) Negatively correlated investments 
D) Investments whose reaction to economic conditions will not be similar

Question 8

The main benefit of diversification is that it reduces the exposure of your investments to the adverse effects of any individual stock.

Accepted Answer

A) True 
 B)False

Question 9

Asset allocation is the process of dividing money across financial assets which include all of the following except

Accepted Answer

A) stocks. 
B) bonds. 
C) mutual funds. 
D) real estate. 
A) stocks. 
B) bonds. 
C) mutual funds. 
D) real estate.

Question 10

________ risk is the risk that a stock is susceptible to poor performance due to weak stock market conditions.

Accepted Answer

A) Business 
B) Market 
C) Default 
D) Management 
A) Business 
B) Market 
C) Default 
D) Management

Question 11

In a portfolio,stocks and bonds are

Accepted Answer

A) different in risk and return. 
B) not highly correlated. 
C) highly correlated. 
D) A and B 
A) different in risk and return. 
B) not highly correlated. 
C) highly correlated. 
D) A and B

Question 12

________ REITs invest money directly in properties.

Accepted Answer

A) Asset 
B) Equity 
C) Mortgage 
D) Property 
A) Asset 
B) Equity 
C) Mortgage 
D) Property

Question 13

Investors in the early stages of their career path with the need for safety and liquidity,should consider money market investments.

Accepted Answer

A) True 
 B)False

Question 14

Call options are the right to buy stock and put options are the right to sell stock,but both types of options can be either bought or sold.

Accepted Answer

A) True 
 B)False

Question 15

Asset allocation is the process of allocating money across financial assets,such as stocks,bonds,and mutual funds,with the objective of eliminating risk altogether.

Accepted Answer

A) True 
 B)False

Question 16

In constructing a portfolio,you should diversify across several investments.

Accepted Answer

A) True 
 B)False

Question 17

Name two ways to diversify common stock.

Accepted Answer

Across ind

Question 18

Many investment advisors recommend ________ percent of foreign stocks for a diversified portfolio.

Accepted Answer

A) 0 
B) 10 
C) 20 
D) 30 
A) 0 
B) 10 
C) 20 
D) 30

Question 19

A good asset allocation plan changes over time.How does it change from mid-life to retirement?

Accepted Answer

The change should mo

Question 20

A portfolio can reduce risk when its

Accepted Answer

A) investments do not move in tandem. 
B) investments move in tandem. 
C) returns of individual investments are similar. 
D) investments are from similar industries. 
A) investments do not move in tandem. 
B) investments move in tandem. 
C) returns of individual investments are similar. 
D) investments are from similar industries.

Diversifying your investments could even protect you to some degree from the problems associated with insider trading.

Selling options on stock you already own

Most investors put a heavy emphasis on stocks at an early stage in life and gradually shift toward bonds or stocks of stable firms that pay high dividends later in life.

Which of the following will increase the premium on a call option?

Because foreign stocks can produce such high returns,many investment advisers recommend that you invest about 45% of your portfolio in these stocks.

In compiling a portfolio,which of the following should you not consider?

The main benefit of diversification is that it reduces the exposure of your investments to the adverse effects of any individual stock.

Asset allocation is the process of dividing money across financial assets which include all of the following except

________ risk is the risk that a stock is susceptible to poor performance due to weak stock market conditions.

In a portfolio,stocks and bonds are

________ REITs invest money directly in properties.

Investors in the early stages of their career path with the need for safety and liquidity,should consider money market investments.

Call options are the right to buy stock and put options are the right to sell stock,but both types of options can be either bought or sold.

Asset allocation is the process of allocating money across financial assets,such as stocks,bonds,and mutual funds,with the objective of eliminating risk altogether.

In constructing a portfolio,you should diversify across several investments.

Name two ways to diversify common stock.

Many investment advisors recommend ________ percent of foreign stocks for a diversified portfolio.

A good asset allocation plan changes over time.How does it change from mid-life to retirement?

A portfolio can reduce risk when its

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Exam 18: Asset Allocation

Diversifying your investments could even protect you to some degree from the problems associated with insider trading.

Selling options on stock you already own

Most investors put a heavy emphasis on stocks at an early stage in life and gradually shift toward bonds or stocks of stable firms that pay high dividends later in life.

Which of the following will increase the premium on a call option?

Because foreign stocks can produce such high returns,many investment advisers recommend that you invest about 45% of your portfolio in these stocks.

In compiling a portfolio,which of the following should you not consider?

The main benefit of diversification is that it reduces the exposure of your investments to the adverse effects of any individual stock.

Asset allocation is the process of dividing money across financial assets which include all of the following except

________ risk is the risk that a stock is susceptible to poor performance due to weak stock market conditions.

In a portfolio,stocks and bonds are

________ REITs invest money directly in properties.

Investors in the early stages of their career path with the need for safety and liquidity,should consider money market investments.

Call options are the right to buy stock and put options are the right to sell stock,but both types of options can be either bought or sold.

Asset allocation is the process of allocating money across financial assets,such as stocks,bonds,and mutual funds,with the objective of eliminating risk altogether.

In constructing a portfolio,you should diversify across several investments.

Name two ways to diversify common stock.

Many investment advisors recommend ________ percent of foreign stocks for a diversified portfolio.

A good asset allocation plan changes over time.How does it change from mid-life to retirement?

A portfolio can reduce risk when its

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters