Question 1

REITs are classified according to how they invest their money including

Accepted Answer

A) equity REITs. 
B) mortgage REITs. 
C) mutual fund REITs. 
D) Both A and B. 
A) equity REITs. 
B) mortgage REITs. 
C) mutual fund REITs. 
D) Both A and B.

Question 2

Over time,you should change the composition of your investment portfolio in response to change in your

Accepted Answer

A) market expectations. 
B) investment goals. 
C) life circumstances. 
D) All of the above. 
A) market expectations. 
B) investment goals. 
C) life circumstances. 
D) All of the above.

Question 3

List two considerations that affect your asset allocation decision.

Accepted Answer

Your stage in life,your degree

Question 4

Advantages of investing in REITs are that

Accepted Answer

A) shares can be purchased directly from the company. 
B) the shareholders decide which properties to buy and sell. 
C) the managers take care of maintenance. 
D) the income is nontaxable. 
A) shares can be purchased directly from the company. 
B) the shareholders decide which properties to buy and sell. 
C) the managers take care of maintenance. 
D) the income is nontaxable.

Question 5

If you are willing to accept a moderate level of risk,you should invest in

Accepted Answer

A) savings accounts. 
B) individual stocks. 
C) a stock mutual fund. 
D) T-bills. 
A) savings accounts. 
B) individual stocks. 
C) a stock mutual fund. 
D) T-bills.

Question 6

The stocks,bonds,and mutual funds that an investor owns comprise his/her ________.

Accepted Answer

The answer of The stocks,bonds,and mutual funds that an investor...

Question 7

The primary benefit of diversification is that it

Accepted Answer

A) is convenient. 
B) is cheaper. 
C) reduces the exposure of your investments to adverse effects of any individual investment. 
D) increases stock volatility. 
A) is convenient. 
B) is cheaper. 
C) reduces the exposure of your investments to adverse effects of any individual investment. 
D) increases stock volatility.

Question 8

One way to reduce your diversification costs is to invest in various mutual funds.

Accepted Answer

A) True 
 B)False

Question 9

A(n)________ gives you the opportunity to purchase or sell stocks at a set price for a set period of time and are very risky investments.

Accepted Answer

The answer of A(n)________ gives you the opportunity to purchase...

Question 10

If your portfolio consists of 100 shares of Dell,100 shares of IBM,and 100 shares of Gateway,the following would be true of your portfolio.

Accepted Answer

A) It is well diversified by industry 
B) It is well diversified by type of asset 
C) It has poor diversification 
D) It has no diversification 
A) It is well diversified by industry 
B) It is well diversified by type of asset 
C) It has poor diversification 
D) It has no diversification

Question 11

Bond prices are inversely related to interest rates and are not directly influenced by stock market conditions.

Accepted Answer

A) True 
 B)False

Question 12

Stock options

Accepted Answer

A) are traded on exchanges. 
B) are relatively simple. 
C) are less risky than stocks. 
D) pay dividends. 
A) are traded on exchanges. 
B) are relatively simple. 
C) are less risky than stocks. 
D) pay dividends.

Question 13

When you compile a portfolio,you should include investments that exhibit a high positive correlation.

Accepted Answer

A) True 
 B)False

Question 14

________ increase risk while ________ decrease risk in a portfolio.

Accepted Answer

A) Stocks; bonds 
B) Bonds; mutual funds 
C) Bonds; REITs 
D) Mutual funds; stocks 
A) Stocks; bonds 
B) Bonds; mutual funds 
C) Bonds; REITs 
D) Mutual funds; stocks

Question 15

If you find yourself checking the prices of stocks in your portfolio on an hourly basis and you are not a day trader,the most likely cause is

Accepted Answer

A) the market risk of your stocks. 
B) the business risk of the management of your companies. 
C) the low risk tolerance you have to owning stock. 
D) the political risk of what Congress might do. 
A) the market risk of your stocks. 
B) the business risk of the management of your companies. 
C) the low risk tolerance you have to owning stock. 
D) the political risk of what Congress might do.

Question 16

When investing outside the United States,stocks are typically ________ U.S.-based stocks.

Accepted Answer

A) as volatile as 
B) less volatile than 
C) more volatile than 
D) more stable than 
A) as volatile as 
B) less volatile than 
C) more volatile than 
D) more stable than

Question 17

If you own a call option in shares of IBM and the price increases,you could make a profit by

Accepted Answer

A) selling the shares of IBM. 
B) buying the shares of IBM. 
C) selling the option. 
D) All of the above. 
A) selling the shares of IBM. 
B) buying the shares of IBM. 
C) selling the option. 
D) All of the above.

Question 18

If you anticipate strong economic market conditions,you may want to

Accepted Answer

A) shift more funds to bonds. 
B) shift more funds to stocks. 
C) allocate more to cash. 
D) shift more funds to bond mutual funds. 
A) shift more funds to bonds. 
B) shift more funds to stocks. 
C) allocate more to cash. 
D) shift more funds to bond mutual funds.

Question 19

Diversification is especially beneficial during periods where the stock market conditions are generally poor.

Accepted Answer

A) True 
 B)False

Question 20

A call option is purchased for a premium of $400.The current price of the stock is $42 per share and the exercise price is $44 per share.The option is exercised when the stock is selling for $50 per share.What would be your return on the option if after exercising it,you immediately sold the stock at the market price of $50 per share? Ignore taxes and brokerage commissions.
(a)8 percent
(b)12 percent
(c)50 percent
(d)200 percent

Accepted Answer

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

REITs are classified according to how they invest their money including

Over time,you should change the composition of your investment portfolio in response to change in your

List two considerations that affect your asset allocation decision.

Advantages of investing in REITs are that

If you are willing to accept a moderate level of risk,you should invest in

The stocks,bonds,and mutual funds that an investor owns comprise his/her ________.

The primary benefit of diversification is that it

One way to reduce your diversification costs is to invest in various mutual funds.

A(n)________ gives you the opportunity to purchase or sell stocks at a set price for a set period of time and are very risky investments.

If your portfolio consists of 100 shares of Dell,100 shares of IBM,and 100 shares of Gateway,the following would be true of your portfolio.

Bond prices are inversely related to interest rates and are not directly influenced by stock market conditions.

Stock options

When you compile a portfolio,you should include investments that exhibit a high positive correlation.

increase risk while decrease risk in a portfolio.

If you find yourself checking the prices of stocks in your portfolio on an hourly basis and you are not a day trader,the most likely cause is

When investing outside the United States,stocks are typically ________ U.S.-based stocks.

If you own a call option in shares of IBM and the price increases,you could make a profit by

If you anticipate strong economic market conditions,you may want to

Diversification is especially beneficial during periods where the stock market conditions are generally poor.

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

REITs are classified according to how they invest their money including

Over time,you should change the composition of your investment portfolio in response to change in your

List two considerations that affect your asset allocation decision.

Advantages of investing in REITs are that

If you are willing to accept a moderate level of risk,you should invest in

The stocks,bonds,and mutual funds that an investor owns comprise his/her ________.

The primary benefit of diversification is that it

One way to reduce your diversification costs is to invest in various mutual funds.

A(n)________ gives you the opportunity to purchase or sell stocks at a set price for a set period of time and are very risky investments.

If your portfolio consists of 100 shares of Dell,100 shares of IBM,and 100 shares of Gateway,the following would be true of your portfolio.

Bond prices are inversely related to interest rates and are not directly influenced by stock market conditions.

Stock options

When you compile a portfolio,you should include investments that exhibit a high positive correlation.

________ increase risk while ________ decrease risk in a portfolio.

If you find yourself checking the prices of stocks in your portfolio on an hourly basis and you are not a day trader,the most likely cause is

When investing outside the United States,stocks are typically ________ U.S.-based stocks.

If you own a call option in shares of IBM and the price increases,you could make a profit by

If you anticipate strong economic market conditions,you may want to

Diversification is especially beneficial during periods where the stock market conditions are generally poor.

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

increase risk while decrease risk in a portfolio.