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Exam 11: Personal Investing - Investing Fundamentals

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Question 1

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If the stocks listed on the TSX all went up 10 percent, your XIU large-cap exchange-traded fund would go up 15 percent.

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Question 2

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What advantage does asset allocation have for investor?

A) Allocation of all investments in the stocks of several different countries for safety.
B) An allocation of bonds and stocks in equal amounts to ensure safety.
C) A portfolio with many kinds of assets to produce a good return with less risk.
D) An ideal portfolio generating no risk.

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Question 3

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Last year you held the following investments: $50 000 in bonds, which earned 5.5 percent last year $5000 in shares of Moose Pasture Minerals, which lost 22 percent last year $10 000 in shares of Amalgamated Monkey Nuts, which earned 12 percent last year $20 000 in Offshore Diversification Mutual Fund, which earned 8 percent last year $15 000 in XIU exchange-traded fund, and the TSX was up 11 percent last year What was the return on the portfolio for last year, and what is it worth now?

One of the attractive features of mutual funds is that they offer small investors a diversified portfolio and professional management.

Preferred shares always pay their dividends.

Which is true about dividends?

An individual's degree of risk tolerance is

REITs can be used to

If you purchase 100 shares of Ajax Corporation for $15 a share and one year later sell it for $20 a share, what was your return if the stock paid $2 per share dividends? (Ignore commissions and trading fees. Round to the nearest whole percent.)

Mutual fund gains can be in the form of dividends or capital gains, which are passed on to the individual investors.

To earn the highest possible return in the stock market, you will need to

It would be a good investment strategy to

Of the following, which is not used in measuring a stock's return?

You can reduce your investment risk through

Asset allocation is another name for diversification.

Low-risk bonds tend to offer higher interest payments.

The standard deviation of a stock's monthly returns measures the degree of volatility of a stock's returns over time and can be a method of evaluating a stock's future risk.

The risk-return relationship means

Making an investment in an exchange-traded fund is more risky than buying the common shares of just one company.

Use of Financial Calculator TI BA II Plus required. You are investing to achieve the following goals: A down payment for a cottage in the amount of $8000 in 6 years, $4000 for a trip to Europe in 3 years, and $150 000 to supplement retirement income in 24 years. If you can earn 7 percent compounded monthly on your investments, how much should you be saving each month?