Midterm Topics - Part 2

Question 1

Three types of Risk Appetite

Answer 1

(1) Conservative
(2) Moderate
(3) Aggressive

Question 2

Prioritize security over returns such as banks, mp2 savings, cooperative bonds.

Answer 2

Conservative

Question 3

Earning through capital gains from selling asset, cash flow (dividends, interest, etc.)

Examples are index funds, mutual funds, dividend stocks

Answer 3

Moderate

Question 4

Have high risk tolerance. Willing to risk more money.

Answer 4

Aggressive

Question 5

Six Investment Alternatives

Answer 5

(1) Shares
(2) Debentures/Bonds
(3) Bank deposits
(4) Insurance
(5) Real Estate
(6) Gold/Silver

Question 6

Granting ownership from the company which you bought shares.

Answer 6

Shares

Question 7

Two types of shares

Answer 7

(1) Common or Ordinary Shares
(2) Preferred Shares

Question 8

Considered volatile because of the changes in market price

Answer 8

Shares

Question 9

Have no voting rights. Have priority over a company’s income.

Answer 9

Preferred shareholders

Question 10

Last in line when it comes to company’s assets. Have voting rights.

Answer 10

Common shareholders

Question 11

All _____ are bonds but not all bonds are _____.

Answer 11

Debentures

Question 12

May be unsecured or secured. With interest and maturity.

Answer 12

Debentures/Bonds

Question 13

Considered safe Investment, may earn interest in savings.

Answer 13

Banks deposits

Question 14

Advantages of Bank Deposits

Answer 14

(1) Adequate Liquidity
(2) Banks offer loan facilities
(3) Procedures and Formalities
(4) Banks offer various services

Question 15

Limitations on Bank deposits

Answer 15

(1) Rate of return is low
(2) ROI is not adequate
(3) Capital appreciation is not possible

Question 16

Examples of insurance

Answer 16

(1) Life Insurance
(2) Health Insurance
(3) Funeral Insurance
(4) Non life insurance

Question 17

Earns rent income, appreciation

Answer 17

Real Estate

Question 18

When the value of other investment fall, _____ appreciates in value.

Answer 18

Gold/Silver

Question 19

When you buy _____ you may invest in top 30 companies in the Philippines.

Answer 19

Index stocks

Question 20

When income exceeds consumption desires, people tend to _____ the excess.

Answer 20

Save

Question 21

Consuming less out of a given amount of resources in the present in order to consume more in the future.

Answer 21

Deferred consumption

Question 22

Referred to as the price of borrowing

Answer 22

Interest rates

Question 23

Basic Investment Objectives

Answer 23

(1) Primary Investment Objectives
(2) Secondary Investment Objectives

Question 24

Three Primary Investment Objectives

Answer 24

(1) Security
(2) Liquidity
(3) Yield

Question 25

Two secondary investment objectives

Answer 25

(1) Tax minimization
(2) Marketability

Question 26

Two concepts of investment

Answer 26

(1) Economic Investment
(2) Financial Investment