Question 1

A decrease in the value of stocks, bonds, or other investments may cause investors to experience ____________ risk.

Accepted Answer

A)   inflation
B)   interest rate
C)   business failure
D)   market
E)   income

Question 2

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Accepted Answer

A) True 
 B)False

Question 3

Once you have made a decision to buy an investment, there is no need for continued evaluation.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following statements is true?

Accepted Answer

A)   Investors should put all of their "eggs in one basket."
B)   Individuals can ignore their tolerance for risk when selecting specific investments.
C)   Diversification is one way to lessen systematic risk.
D)   The amount of time a specific investment has to work is an important consideration when developing an investment portfolio.
E)   Younger investors should invest a large percentage of their portfolio in income-producing securities.

Question 5

Terry Hamilton has just received $30,000 from an uncle who died and is trying to decide how to invest it. She has done some research has decided that about 30% of the money should go into large cap stocks, 20% into medium cap stocks, 15% into small cap stocks, 10% into bonds, 10% into foreign stock, and 15% into cash. She thinks that even if one area does not do that well, the rest will so that her overall return will be pretty good. What aspect of investing is Terry most concerned about?

Accepted Answer

A)   Income
B)   Return
C)   Diversification
D)   Liquidity
E)   Investment growth

Question 6

Which of the following statements is true?

Accepted Answer

A)   When establishing an investment program, you should begin by monitoring your investments.
B)   When you are choosing an investment, you should examine only the interest rate risk factor associated with each investment.
C)   When establishing an investment program, you should examine the potential return offered by different investment alternatives.
D)   Leave the financial planning to the professionals.
E)   There is no need to monitor your investments after you have made your investment decision.

Question 7

Which one of the following individuals should have a higher tolerance for risk?

Accepted Answer

A)   Joan Cummings, who is a single mother with two small children
B)   Darren Carter, who works for American Airlines and is worried that he is going to be laid off soon
C)   Barry Parks, who is an investment banker and earns over $200,000 per year
D)   Michael Clark, who is 74 years old and has been retired for 6 years
E)   Fred Funderbunk, who is a pizza delivery person and makes about $15,000 per year

Question 8

Which one of the following would not be considered a safe investment for a conservative investor?

Accepted Answer

A)   Corporate bonds
B)   Certificates of deposit
C)   Passbook savings accounts
D)   Blue-chip stocks
E)   Collectibles

Question 9

A speculative investment is an investment that is made in the hope of earning a relatively large profit over a long period of time.

Accepted Answer

A) True 
 B)False

Question 10

The rate of return on an investment has no effect on a long-term investment program.

Accepted Answer

A) True 
 B)False

Question 11

Today, federal, state, and local governments and most corporations have a home page where you can obtain valuable information.

Accepted Answer

A) True 
 B)False

Question 12

Which one of the following is the most readily available source of current price information for an investment in stocks or bonds?

Accepted Answer

A)   Daily newspaper
B)   Government publications
C)   Corporate reports
D)   Investor newsletters
E)   Business periodicals

Question 13

Lester McCann wants to invest but is worried about risk. In particular, he is worried that the money he invests today will not buy as much ten years from now. What type of risk concerns Lester?

Accepted Answer

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

Question 14

One risk associated with a global investment is the difficulty of obtaining reliable accounting information needed to evaluate stocks issued by international companies.

Accepted Answer

A) True 
 B)False

Question 15

John Hernandez is 24 and has saved enough money to fund an adequate emergency fund. In addition, he has saved $5,600 that can be used to fund an investment program. He is single, has no dependents, and would like to retire when he is 60. Which one of the investment factors listed below would be most important for an investor like Mr. Hernandez?

Accepted Answer

A)   Beta
B)   Income
C)   Growth
D)   Risk
E)   Liquidity

Question 16

Sam Waters just received $10,000 from his grandmother's estate. He has thought about buying himself a new Harley with the money but has decided instead to add the money to his mutual fund account. Which suggestion for obtaining the money he needs for investing is he following?

Accepted Answer

A)   Paying himself first
B)   Taking advantage of employer-sponsored retirement programs
C)   Participating in an elective savings program
D)   Making a special effort once or twice a year to save
E)   Taking advantage of gifts, inheritance and other windfalls E

Question 17

Allen Arnold earns $3,000 per month. He pays his mortgage, utilities, grocery and other bills and then he makes sure to set aside $150 for his savings and investment accounts before he spends money to go to movies and other personal expenses. Which suggestion for obtaining the money he needs for investing is he following?

Accepted Answer

A)   Paying himself first
B)   Taking advantage of employer-sponsored retirement programs
C)   Participating in an elective savings program
D)   Making a special effort once or twice a year to save
E)   Taking advantage of gifts, inheritance and other windfalls

Question 18

Which one of the following investments offers the greatest liquidity?

Accepted Answer

A)   Savings account
B)   Common stock
C)   Corporate bond
D)   Real estate
E)   Collectibles A

Question 19

Which one of the following investments offers the least liquidity?

Accepted Answer

A)   Checking account
B)   Government bond
C)   Real estate
D)   Savings account
E)   Preferred stock C

Question 20

An investor concerned with a predictable source of income provided by an investment would choose:

Accepted Answer

A)   government bonds.
B)   commodities.
C)   options.
D)   common stocks.
E)   speculative investments.

Exam 13: Investing Fundamentals

A decrease in the value of stocks, bonds, or other investments may cause investors to experience ____________ risk.

Correct Answer
verified

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Correct Answer
verified

Once you have made a decision to buy an investment, there is no need for continued evaluation.

Correct Answer
verified

Which one of the following statements is true?

Correct Answer
verified

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Which one of the following individuals should have a higher tolerance for risk?

Correct Answer
verified

Which one of the following would not be considered a safe investment for a conservative investor?

Correct Answer
verified

A speculative investment is an investment that is made in the hope of earning a relatively large profit over a long period of time.

Correct Answer
verified

The rate of return on an investment has no effect on a long-term investment program.

Correct Answer
verified

Today, federal, state, and local governments and most corporations have a home page where you can obtain valuable information.

Correct Answer
verified

Which one of the following is the most readily available source of current price information for an investment in stocks or bonds?

Correct Answer
verified

Lester McCann wants to invest but is worried about risk. In particular, he is worried that the money he invests today will not buy as much ten years from now. What type of risk concerns Lester?

Correct Answer
verified

One risk associated with a global investment is the difficulty of obtaining reliable accounting information needed to evaluate stocks issued by international companies.

Correct Answer
verified

Correct Answer
verified

Sam Waters just received $10,000 from his grandmother's estate. He has thought about buying himself a new Harley with the money but has decided instead to add the money to his mutual fund account. Which suggestion for obtaining the money he needs for investing is he following?

Correct Answer
verified
E

Correct Answer
verified

Which one of the following investments offers the greatest liquidity?

Correct Answer
verified
A

Which one of the following investments offers the least liquidity?

Correct Answer
verified
C

An investor concerned with a predictable source of income provided by an investment would choose:

Correct Answer
verified

Exam 13: Investing Fundamentals

A decrease in the value of stocks, bonds, or other investments may cause investors to experience ____________ risk.

Correct AnswerverifiedShow Answer

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Correct AnswerverifiedShow Answer

Once you have made a decision to buy an investment, there is no need for continued evaluation.

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which one of the following individuals should have a higher tolerance for risk?

Correct AnswerverifiedShow Answer

Which one of the following would not be considered a safe investment for a conservative investor?

Correct AnswerverifiedShow Answer

A speculative investment is an investment that is made in the hope of earning a relatively large profit over a long period of time.

Correct AnswerverifiedShow Answer

The rate of return on an investment has no effect on a long-term investment program.

Correct AnswerverifiedShow Answer

Today, federal, state, and local governments and most corporations have a home page where you can obtain valuable information.

Correct AnswerverifiedShow Answer

Which one of the following is the most readily available source of current price information for an investment in stocks or bonds?

Correct AnswerverifiedShow Answer

Lester McCann wants to invest but is worried about risk. In particular, he is worried that the money he invests today will not buy as much ten years from now. What type of risk concerns Lester?

Correct AnswerverifiedShow Answer

One risk associated with a global investment is the difficulty of obtaining reliable accounting information needed to evaluate stocks issued by international companies.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sam Waters just received $10,000 from his grandmother's estate. He has thought about buying himself a new Harley with the money but has decided instead to add the money to his mutual fund account. Which suggestion for obtaining the money he needs for investing is he following?

Correct AnswerverifiedE

Correct AnswerverifiedShow Answer

Which one of the following investments offers the greatest liquidity?

Correct AnswerverifiedA

Which one of the following investments offers the least liquidity?

Correct AnswerverifiedC

An investor concerned with a predictable source of income provided by an investment would choose:

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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E

Correct Answer
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Correct Answer
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A

Correct Answer
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C

Correct Answer
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