Question 1

Which of the following risks deals with the possibility that bad management, unsuccessful products, or other factors will cause the business to be less profitable than originally anticipated?

Accepted Answer

A)   Inflation risk
B)   Interest rate risk
C)   Business failure risk
D)   Market risk
E)   Stock riskF) A) and E)
G) B) and D)

Question 2

A call feature

Accepted Answer

A)   Allows bondholders to convert their bonds to a specified number of shares of common stock.
B)   Is not available for corporate bonds.
C)   Allows the corporation to buy outstanding bonds from current bondholders before the maturity date.
D)   Is sold by companies with a poor earnings history.
E)   Is used in connection with leveraged buyouts.F) B) and E)
G) A) and B)

Question 3

Which of the following risks deals with fluctuations in the economy from a period of rapid expansion followed by a period of recession?

Accepted Answer

A)   Inflation risk
B)   Interest rate risk
C)   Business failure risk
D)   Market risk
E)   Stock riskF) A) and E)
G) A) and D)

Question 4

Investors can typically find more websites about stocks and mutual funds than they can find for bonds.

Accepted Answer

A) True 
 B)False

Question 5

To investors, liquidity is the ability to buy or sell an investment quickly without substantially affecting the investment's value.

Accepted Answer

A) True 
 B)False

Question 6

A good rule of thumb is to limit installment payments to ____________ of your net (after-tax)  income.

Accepted Answer

A)   20%
B)   30%
C)   40%
D)   50%
E)   60%F) D) and E)
G) B) and D)

Question 7

From both a legal and ethical standpoint, you have an obligation to pay for credit purchases.

Accepted Answer

A) True 
 B)False

Question 8

If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investment's value, you are most concerned with

Accepted Answer

A)   Income.
B)   Growth.
C)   Liquidity.
D)   Business failure risk.
E)   Market risk.F) None of the above
G) A) and E)

Question 9

A U.S. government security issued in minimum units of $100 with a 30-year maturity is called a

Accepted Answer

A)   Subordinated bond.
B)   Treasury bill.
C)   Treasury note.
D)   Treasury bond.
E)   Savings bond.F) A) and E)
G) A) and D)

Question 10

Whether you are making your own decisions or have professional help, you must consider the tax consequences of selling your investments.

Accepted Answer

A) True 
 B)False

Question 11

All of the following statements are considered to be good advice for a potential investor in performing a financial checkup except

Accepted Answer

A)   Work to balance your budget.
B)   Increase credit purchases and make installment payments in order to increase cash available for investing.
C)   Manage your credit card debt.
D)   Start an emergency fund.
E)   Establish a line of credit for emergency needs.F) B) and E)
G) A) and B)

Question 12

A 25-year-old single investor with a secure, full-time job that pays $60,000 would likely prefer investments with less risk.

Accepted Answer

A) True 
 B)False

Question 13

The value of a bond is not tied to the corporation's ability to repay its bond at maturity.

Accepted Answer

A) True 
 B)False

Question 14

According to some financial experts like Suze Orman, how much of an investment program should a 50-year-old have in growth investments?

Accepted Answer

A)   30%
B)   40%
C)   50%
D)   60%
E)   70%F) A) and D)
G) A) and C)

Question 15

Older investors are often more interested in ______ investments.

Accepted Answer

A)   aggressive
B)   international
C)   Speculative
D)   conservative
E)   growth-orientedF) A) and E)
G) None of the above

Question 16

A _____________ is an employer-sponsored retirement account, and participating in one is one of the easiest ways to begin an investment program.

Accepted Answer

A)   TRA account
B)   301(a)  account
C)   509(re)  account
D)   401(k)  account
E)   321(a)  accountF) All of the above
G) A) and D)

Question 17

The type of bond that is tracked electronically, using computers to record the owners' information, by the issuing company is a

Accepted Answer

A)   General obligation bond.
B)   Registered bond.
C)   Revenue bond.
D)   Tax-exempt bond.
E)   Zero-coupon bond.F) A) and B)
G) D) and E)

Question 18

Which of the following is not a rating agency for bonds?

Accepted Answer

A)   Moody's Investors Service
B)   Bond Rating Corporation
C)   Standard & Poor's Corporation
D)   Fitch Ratings
E)   MergentF) A) and B)
G) A) and C)

Question 19

Assume that you purchase a $1,000 bond issued by GE that pays 5% interest each year. What is the annual interest amount?

Accepted Answer

A)   $5.00
B)   $25.00
C)   $40.00
D)   $50.00
E)   $1,000F) A) and E)
G) B) and D)

Question 20

Which of the following statements is false?

Accepted Answer

A)   The federal government sells bonds to obtain financing.
B)   U.S. government securities carry a reduced risk of default.
C)   U.S. government securities are considered a very conservative and safe investment.
D)   Individual investors who purchase U.S. government securities must hold the investments until maturity.
E)   Treasury securities may be purchased through banks or brokers.F) A) and E)
G) D) and E)

Exam 11: Investing Fundamentals and Bonds

Which of the following statements is false?

Correct AnswerverifiedShow Answer

A call feature

Correct AnswerverifiedShow Answer

The type of bond that is tracked electronically, using computers to record the owners' information, by the issuing company is a

Correct AnswerverifiedShow Answer

Which of the following is not a rating agency for bonds?

Correct AnswerverifiedShow Answer

If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investment's value, you are most concerned with

Correct AnswerverifiedShow Answer

A 25-year-old single investor with a secure, full-time job that pays $60,000 would likely prefer investments with less risk.

Correct AnswerverifiedShow Answer

From both a legal and ethical standpoint, you have an obligation to pay for credit purchases.

Correct AnswerverifiedShow Answer

A U.S. government security issued in minimum units of $100 with a 30-year maturity is called a

Correct AnswerverifiedShow Answer

To investors, liquidity is the ability to buy or sell an investment quickly without substantially affecting the investment's value.

Correct AnswerverifiedShow Answer

Older investors are often more interested in ______ investments.

Correct AnswerverifiedShow Answer

According to some financial experts like Suze Orman, how much of an investment program should a 50-year-old have in growth investments?

Correct AnswerverifiedShow Answer

Investors can typically find more websites about stocks and mutual funds than they can find for bonds.

Correct AnswerverifiedShow Answer

A _____________ is an employer-sponsored retirement account, and participating in one is one of the easiest ways to begin an investment program.

Correct AnswerverifiedShow Answer

Which of the following risks deals with fluctuations in the economy from a period of rapid expansion followed by a period of recession?

Correct AnswerverifiedShow Answer

Whether you are making your own decisions or have professional help, you must consider the tax consequences of selling your investments.

Correct AnswerverifiedShow Answer

All of the following statements are considered to be good advice for a potential investor in performing a financial checkup except

Correct AnswerverifiedShow Answer

Assume that you purchase a $1,000 bond issued by GE that pays 5% interest each year. What is the annual interest amount?

Correct AnswerverifiedShow Answer

A good rule of thumb is to limit installment payments to ____________ of your net (after-tax) income.

Correct AnswerverifiedShow Answer

Which of the following risks deals with the possibility that bad management, unsuccessful products, or other factors will cause the business to be less profitable than originally anticipated?

Correct AnswerverifiedShow Answer

The value of a bond is not tied to the corporation's ability to repay its bond at maturity.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified