Deck 11: Investment Planning

Question 1

Which of the following is correct regarding commercial paper?
I. Maximum maturity date 180 days
II. Maximum maturity date 270 days
III. Short-term debt
IV. Unsecured

A) I, IV.
B) II, III, IV.
C) I, III, IV.
D) I, III.

Answer 1

II, III, IV.

Question 2

The _____ states that an investor needs to be compensated for the time value of capital (money) invested and the additional risk for making the investment.

A) Arbitrage Pricing Theory.
B) Capital Asset Pricing Model.
C) Fundamental Analysis.
D) Technical Analysis.

Answer 2

B

Question 3

Which of the following is a tangible investment?

A) Antique automobile.
B) Bond.
C) REIT.
D) Stock.

Answer 3

A

Question 4

Which of the following is a passive management approach to investing?

A) All-in Allocation.
B) Margin Account.
C) Short Selling.
D) Systematic Withdrawal Plan.

Question 5

Which of the following is a hybrid security?

A) Arbitrage fund.
B) Convertible bond.
C) Exchange traded fund.
D) Mutual fund.

Question 6

Which of the following is purchased at par value, and interest is accrued and paid at redemption. Interest stops accruing after 30 years. Interest earnings are subject to federal income tax but are exempt from state and local income tax.

A) Series BB savings bond.
B) Series EE savings bond.
C) Series H savings bond.
D) Series I treasury bond.

Question 7

Which of the following are correct regarding Mortgage-backed securities?
I. Interest only passes through to the investor.
II. Invest in a pool of mortgage loans.
III. Principal only passes through to the investor.
IV. Referred to as a pass-through security.

A) I, II.
B) II, III,
C) II, IV.
D) III, IV

Question 8

A(n) _____ allows for diversification by pooling the capital of many investors in order to purchase more securities and reduce the risk of the investment portfolio

A) Exchange traded security.
B) Mutual fund.
C) Margin Account.
D) myIRA.