Question 1

There is no relationship between risk and safety.

Accepted Answer

A) True 
 B)False

Question 2

Equity capital is money:

Accepted Answer

A)   obtained from the owners of a business.
B)   borrowed through banks.
C)   obtained by employee benefit programs.
D)   that has to be repaid.
E)   that has been allocated to a retirement program.F) C) and E)
G) C) and D)

Question 3

Which one of the following statements is true?

Accepted Answer

A)   Global investments must be evaluated just like other investment alternatives.
B)   Since global investments can only be bought in the U.S., there is no need to worry about currency exchange rates.
C)   Today, very few investors are investing in stocks and bonds issued by foreign firms or in global mutual funds.
D)   For most small investors, it makes more sense to invest in stocks and bonds issued by individual foreign firms, rather than in global mutual funds.
E)   Evaluating global investments is easy because there is plenty of good information available.F) A) and C)
G) All of the above

Question 4

A firm is short on cash. Which of the following would be paid first?

Accepted Answer

A)   Dividends to common stock owners
B)   Cash to buy shares of stock from shareholders
C)   Cash to buy bonds from current bondholders
D)   Interest to bond owners
E)   Dividends to preferred stock ownersF) A) and B)
G) B) and D)

Question 5

To manage a financial crisis, many experts recommend that you take action to make sure your financial affairs are in order. Name and describe five steps you can take to ensure that your financial affairs are in order.

Accepted Answer

Students may choose from the list of eig...

Question 6

After Christmas is over, Ted Riley works hard to control his expenses in February so that he can make an extra payment into a mutual fund. Which suggestion for obtaining the money 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 windfallsF) A) and B)
G) B) and D)

Question 7

Which of the following types of investment information can be found on the Internet?

Accepted Answer

A)   Interest rates for certificates of deposit
B)   Current price information for stocks, bonds, and mutual funds
C)   Broker's buy and sell recommendations
D)   Financial calculators
E)   All of theseF) None of the above
G) B) and E)

Question 8

Mike Lively is thinking about buying an investment that represents an ownership claim on a company. The most important priority he has with this investment is receiving his dividends before dividends are paid on other types of investments. What investment is Mike thinking about purchasing?

Accepted Answer

A)   Common stock
B)   Preferred stock
C)   Corporate bond
D)   Option
E)   Mutual fundF) A) and E)
G) B) and C)

Question 9

Mutual funds range from very conservative to extremely speculative investments.

Accepted Answer

A) True 
 B)False

Question 10

Over the past 50 years, stocks and U.S. government bonds have returned about the same rate of return.

Accepted Answer

A) True 
 B)False

Question 11

When investing in global investments, changes in the currency exchange rate may affect the return on your investment.

Accepted Answer

A) True 
 B)False

Question 12

In the beginning of 2013, the average credit card debt for U.S. families was about how much?

Accepted Answer

A)   $5,400
B)   $7,500
C)   $10,200
D)   $15,400
E)   $18,100F) A) and D)
G) C) and D)

Question 13

Which of the following features does not accurately describe a line of credit?

Accepted Answer

A)   Credit line approved before the money is actually needed
B)   Funds available immediately when needed
C)   Obtainable from a credit union, savings and loan association, or bank
D)   Alternative source of emergency funds
E)   Long-term loanF) A) and E)
G) C) and D)

Question 14

James Gripka has a mutual fund that automatically takes $50 out of his checking account each month. Which suggestion for obtaining the money he needs for investing is he following?

Accepted Answer

A)   Taking advantage of gifts, inheritance and other windfalls
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)   Using financial leverage to increase investment returnsF) D) and E)
G) B) and C)

Question 15

Generally, options are conservative, long-term investment techniques.

Accepted Answer

A) True 
 B)False

Question 16

An investment that an investor expects will increase in value is known as a growth investment.

Accepted Answer

A) True 
 B)False

Question 17

Hugh Jackman is thinking about buying an investment. The investment option that he is thinking about buying is an investment where investors pool their money. One of the key features is that it is managed by professional managers. What investment is Hugh thinking about purchasing?

Accepted Answer

A)   Common stock
B)   Preferred stock
C)   Corporate bond
D)   Real estate
E)   Mutual fundF) A) and B)
G) None of the above

Question 18

An example of ____________ risk occurs when an investment does not keep up with prices that are increasing in the overall economy.

Accepted Answer

A)   market
B)   interest
C)   inflation
D)   business failure
E)   currentF) A) and D)
G) B) and C)

Question 19

Garrett Jennings is thinking about buying an investment that represents the most basic form of business ownership and pays a dividend. The dividend on this investment is paid after all other payments and dividends have been made. Which investment is Garrett thinking about purchasing?

Accepted Answer

A)   Common stock
B)   Preferred stock
C)   Corporate bond
D)   Option
E)   Mutual fundF) B) and C)
G) B) and E)

Question 20

Audrey is thinking about an investment that involves buying a written pledge by a corporation to repay a specified amount of money. It also pays interest every 6 months until it matures. What investment is Audrey thinking about purchasing?

Accepted Answer

A)   Common stock
B)   Preferred stock
C)   Corporate bond
D)   Real estate
E)   Mutual fundF) C) and E)
G) B) and C)

Exam 13: Investing Fundamentals

Generally, options are conservative, long-term investment techniques.

Correct AnswerverifiedShow Answer

An example of ____________ risk occurs when an investment does not keep up with prices that are increasing in the overall economy.

Correct AnswerverifiedShow Answer

A firm is short on cash. Which of the following would be paid first?

Correct AnswerverifiedShow Answer

In the beginning of 2013, the average credit card debt for U.S. families was about how much?

Correct AnswerverifiedShow Answer

An investment that an investor expects will increase in value is known as a growth investment.

Correct AnswerverifiedShow Answer

Garrett Jennings is thinking about buying an investment that represents the most basic form of business ownership and pays a dividend. The dividend on this investment is paid after all other payments and dividends have been made. Which investment is Garrett thinking about purchasing?

Correct AnswerverifiedShow Answer

There is no relationship between risk and safety.

Correct AnswerverifiedShow Answer

To manage a financial crisis, many experts recommend that you take action to make sure your financial affairs are in order. Name and describe five steps you can take to ensure that your financial affairs are in order.

Correct AnswerverifiedStudents may choose from the list of eig...View AnswerShow Answer

After Christmas is over, Ted Riley works hard to control his expenses in February so that he can make an extra payment into a mutual fund. Which suggestion for obtaining the money needs for investing is he following?

Correct AnswerverifiedShow Answer

Mutual funds range from very conservative to extremely speculative investments.

Correct AnswerverifiedShow Answer

When investing in global investments, changes in the currency exchange rate may affect the return on your investment.

Correct AnswerverifiedShow Answer

Which of the following types of investment information can be found on the Internet?

Correct AnswerverifiedShow Answer

Mike Lively is thinking about buying an investment that represents an ownership claim on a company. The most important priority he has with this investment is receiving his dividends before dividends are paid on other types of investments. What investment is Mike thinking about purchasing?

Correct AnswerverifiedShow Answer

Over the past 50 years, stocks and U.S. government bonds have returned about the same rate of return.

Correct AnswerverifiedShow Answer

Hugh Jackman is thinking about buying an investment. The investment option that he is thinking about buying is an investment where investors pool their money. One of the key features is that it is managed by professional managers. What investment is Hugh thinking about purchasing?

Correct AnswerverifiedShow Answer

Which of the following features does not accurately describe a line of credit?

Correct AnswerverifiedShow Answer

James Gripka has a mutual fund that automatically takes $50 out of his checking account each month. Which suggestion for obtaining the money he needs for investing is he following?

Correct AnswerverifiedShow Answer

Equity capital is money:

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

Audrey is thinking about an investment that involves buying a written pledge by a corporation to repay a specified amount of money. It also pays interest every 6 months until it matures. What investment is Audrey thinking about purchasing?

Correct AnswerverifiedShow Answer

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Students may choose from the list of eig...
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