Question 1

A stop loss order may not protect an investor's profits if

Accepted Answer

A) the price drops even slightly below the stop price before the order can be executed. 
B) the price enters a prolonged period of gradual decline. 
C) an unexpected event cause the price to drop steeply when the markets are closed. 
D) the stop loss price is never reached. 
A) the price drops even slightly below the stop price before the order can be executed. 
B) the price enters a prolonged period of gradual decline. 
C) an unexpected event cause the price to drop steeply when the markets are closed. 
D) the stop loss price is never reached.

Question 2

Dollar cost averaging is a formula plan to purchase the same number of shares of stock at regular intervals of time.

Accepted Answer

A) True 
 B)False

Question 3

A stop-loss order guarantees that an investor's unrealized profit will be protected.

Accepted Answer

A) True 
 B)False

Question 4

Indexes specifically for the performance of various types of mutual funds are published by

Accepted Answer

A) Value Line. 
B) Standard and Poors. 
C) the Wall Street Journal. 
D) Lipper. 
A) Value Line. 
B) Standard and Poors. 
C) the Wall Street Journal. 
D) Lipper.

Question 5

To compute the holding period return on a bond investment, the investor should divide the purchase price of the bond into

Accepted Answer

A) any increase or decrease in the bond's price. 
B) the annual coupon payment. 
C) the bond's yield to maturity. 
D) coupon payments received plus or minus any change in the bond's price. 
A) any increase or decrease in the bond's price. 
B) the annual coupon payment. 
C) the bond's yield to maturity. 
D) coupon payments received plus or minus any change in the bond's price.

Question 6

Tactical asset allocation is most suitable for

Accepted Answer

A) young, single individuals with good incomes. 
B) retirees. 
C) large institutional investors. 
D) investors who have already accumulated a fair amount of wealth. 
A) young, single individuals with good incomes. 
B) retirees. 
C) large institutional investors. 
D) investors who have already accumulated a fair amount of wealth.

Question 7

Utility stocks are often suitable for low-risk, current-income-oriented portfolios.

Accepted Answer

A) True 
 B)False

Question 8

When developing an asset allocation scheme, it is best to weight each type of asset equally.

Accepted Answer

A) True 
 B)False

Question 9

Twelve months ago, Javier purchased a stock for $28 a share.The stock pays a quarterly dividend of $0.45 per share.Today, Javier sold the stock for $26.75 a share.What is his holding period return?

Accepted Answer

A) -4.46% 
B) 1.96% 
C) 6.73% 
D) 19.6% 
A) -4.46% 
B) 1.96% 
C) 6.73% 
D) 19.6%

Question 10

Dollar cost averaging is a procedure by which an investor

Accepted Answer

A) buys more stock as its price increases. 
B) times investments in order to buy low and sell high. 
C) invests a fixed dollar amount in a security at fixed intervals. 
D) maintains a constant ratio of conservative and aggressive investments. 
A) buys more stock as its price increases. 
B) times investments in order to buy low and sell high. 
C) invests a fixed dollar amount in a security at fixed intervals. 
D) maintains a constant ratio of conservative and aggressive investments.

Question 11

An asset allocation plan should consider which of the following factors?
I.economic outlook
II.capital preservation
III.changing investment goals
IV.investor risk tolerance

Accepted Answer

A) II only 
B) II, III and IV only 
C) I, III and IV only 
D) I, II, III and IV 
A) II only 
B) II, III and IV only 
C) I, III and IV only 
D) I, II, III and IV

Question 12

The holding period return (HPR)

Accepted Answer

A) reflects only capital gains and losses for investment periods of one year or less. 
B) calculates the annual dividend yield on stocks or current interest yield on bonds. 
C) is the most appropriate measure of returns for an investment period exceeding one year. 
D) can be used to determine the actual total return on stocks, bonds, and other investments for periods of one year or less. 
A) reflects only capital gains and losses for investment periods of one year or less. 
B) calculates the annual dividend yield on stocks or current interest yield on bonds. 
C) is the most appropriate measure of returns for an investment period exceeding one year. 
D) can be used to determine the actual total return on stocks, bonds, and other investments for periods of one year or less.

Question 13

Dollar cost averaging is likely to work best with a mutual fund

Accepted Answer

A) whose NAV fluctuates widely, but trends upward. 
B) whose NAV remains relatively constant, like a money market fund. 
C) whose NAV fluctuates widely, but trends downward. 
D) whose NAV fluctuates within a narrow range and is relatively trendless. 
A) whose NAV fluctuates widely, but trends upward. 
B) whose NAV remains relatively constant, like a money market fund. 
C) whose NAV fluctuates widely, but trends downward. 
D) whose NAV fluctuates within a narrow range and is relatively trendless.

Question 14

Emily's marginal tax rate is 28%.She will have $100,000 in taxable income before any stock transactions.If she sells stock at long-term losses totaling $2,500 , her losses will reduce her taxes by

Accepted Answer

A) $2,500. 
B) $840. 
C) $700. 
D) No reduction, the loss is not deductible. 
A) $2,500. 
B) $840. 
C) $700. 
D) No reduction, the loss is not deductible.

Question 15

One important tax rule concerning capital losses is that

Accepted Answer

A) capital losses are always fully deductible. 
B) a maximum of $3,000 of losses in excess of capital gains can be written off against ordinary income in any one year. 
C) a maximum of $10,000 of losses in excess of capital gains can be written off against other income in any one year. 
D) capital losses are never deductible. 
A) capital losses are always fully deductible. 
B) a maximum of $3,000 of losses in excess of capital gains can be written off against ordinary income in any one year. 
C) a maximum of $10,000 of losses in excess of capital gains can be written off against other income in any one year. 
D) capital losses are never deductible.

Question 16

Sharpe measures total risk while Treynor and Jensen measure only systematic risk.

Accepted Answer

A) True 
 B)False

Question 17

An asset allocation plan should consider which of the following investor characteristics?
I.income and employment security
II.marital status
III.age and proximity to retirement
IV.social relationships and peer groups

Accepted Answer

A) II only 
B) I, II and III only 
C) I, III and IV only 
D) I, II, III and IV 
A) II only 
B) I, II and III only 
C) I, III and IV only 
D) I, II, III and IV

Question 18

Investors who who accept the random walk theory should use

Accepted Answer

A) a dollar cost averaging plan. 
B) a constant dollar plan. 
C) a constant ratio plan. 
D) a variable ratio plan. 
A) a dollar cost averaging plan. 
B) a constant dollar plan. 
C) a constant ratio plan. 
D) a variable ratio plan.

Question 19

Most investment professionals consider the Dow Jones Industrial Average (DJIA)to be the most appropriate comparative gauge for evaluating the investment performance of a broadly based common stock portfolio.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following are reasons to consider selling an investment that is currently in a portfolio?
I.The investment has met the original objective.
II.Better investment opportunities currently exist.
III.The outlook for the investment has improved.
IV.The investment has not met expectations and no change is expected.

Accepted Answer

A) I, II and IV only 
B) I, III and IV only 
C) I, II and III only 
D) I, II, III and IV 
A) I, II and IV only 
B) I, III and IV only 
C) I, II and III only 
D) I, II, III and IV

A stop loss order may not protect an investor's profits if

Dollar cost averaging is a formula plan to purchase the same number of shares of stock at regular intervals of time.

A stop-loss order guarantees that an investor's unrealized profit will be protected.

Indexes specifically for the performance of various types of mutual funds are published by

To compute the holding period return on a bond investment, the investor should divide the purchase price of the bond into

Tactical asset allocation is most suitable for

Utility stocks are often suitable for low-risk, current-income-oriented portfolios.

When developing an asset allocation scheme, it is best to weight each type of asset equally.

Twelve months ago, Javier purchased a stock for $28 a share.The stock pays a quarterly dividend of $0.45 per share.Today, Javier sold the stock for $26.75 a share.What is his holding period return?

Dollar cost averaging is a procedure by which an investor

An asset allocation plan should consider which of the following factors? I.economic outlook II.capital preservation III.changing investment goals IV.investor risk tolerance

The holding period return (HPR)

Dollar cost averaging is likely to work best with a mutual fund

Emily's marginal tax rate is 28%.She will have $100,000 in taxable income before any stock transactions.If she sells stock at long-term losses totaling $2,500 , her losses will reduce her taxes by

One important tax rule concerning capital losses is that

Sharpe measures total risk while Treynor and Jensen measure only systematic risk.

An asset allocation plan should consider which of the following investor characteristics? I.income and employment security II.marital status III.age and proximity to retirement IV.social relationships and peer groups

Investors who who accept the random walk theory should use

Most investment professionals consider the Dow Jones Industrial Average (DJIA)to be the most appropriate comparative gauge for evaluating the investment performance of a broadly based common stock portfolio.

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Options: Puts and Calls

Futures Markets and Securities

Filters

Exam 13: Managing Your Own Portfolio

A stop loss order may not protect an investor's profits if

Dollar cost averaging is a formula plan to purchase the same number of shares of stock at regular intervals of time.

A stop-loss order guarantees that an investor's unrealized profit will be protected.

Indexes specifically for the performance of various types of mutual funds are published by

To compute the holding period return on a bond investment, the investor should divide the purchase price of the bond into

Tactical asset allocation is most suitable for

Utility stocks are often suitable for low-risk, current-income-oriented portfolios.

When developing an asset allocation scheme, it is best to weight each type of asset equally.

Twelve months ago, Javier purchased a stock for $28 a share.The stock pays a quarterly dividend of $0.45 per share.Today, Javier sold the stock for $26.75 a share.What is his holding period return?

Dollar cost averaging is a procedure by which an investor

An asset allocation plan should consider which of the following factors? I.economic outlook II.capital preservation III.changing investment goals IV.investor risk tolerance

The holding period return (HPR)

Dollar cost averaging is likely to work best with a mutual fund

Emily's marginal tax rate is 28%.She will have $100,000 in taxable income before any stock transactions.If she sells stock at long-term losses totaling $2,500 , her losses will reduce her taxes by

One important tax rule concerning capital losses is that

Sharpe measures total risk while Treynor and Jensen measure only systematic risk.

An asset allocation plan should consider which of the following investor characteristics? I.income and employment security II.marital status III.age and proximity to retirement IV.social relationships and peer groups

Investors who who accept the random walk theory should use

Most investment professionals consider the Dow Jones Industrial Average (DJIA)to be the most appropriate comparative gauge for evaluating the investment performance of a broadly based common stock portfolio.

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Options: Puts and Calls

Futures Markets and Securities

Filters