Semester 1 Final

Question 1

Safe investments contain…

Answer 1

Government Bond, Savings accounts, Certified deposits, Certain corporate bonds

Question 2

Which of the following would be considered speculative investments?

Answer 2

Precious metals

Question 3

Which approach should someone take who is new to investing?

Answer 3

Investments with less risk

Question 4

When choosing a investment you should consider risk. The four components of risk are…

Answer 4

inflation, interest rate, business fraud, and market

Question 5

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?

Answer 5

Business failure risk

Question 6

Which of the following risks associated with preferred stocks or government or corporate bonds is a result of changes in rates in the economy?

Answer 6

Interest rate risk

Question 7

What risk reduces your purchasing power?

Answer 7

Inflation

Question 8

Market risk is associated with fluctuations in the market due to:

Answer 8

Economic conditions such as rapid expansion and recession

Question 9

What describes a growth company?

Answer 9

profits are reinvested in the company for future growth

Question 10

The process of spreading your assets among multiple types of investments to lesson risk is called:

Answer 10

Risk allocation

Question 11

What investment typically has the most risk?

Answer 11

Stocks

Question 12

Which type of investment has returned an average of 10 percent per year over the past 100 years?

Answer 12

Stocks

Question 13

If you need access to your funds in two years or less, which type of investment would you not choose?

Answer 13

Stocks and mutual funds

Question 14

Generally, payments on corporate bonds are paid every:

Answer 14

Six months

Question 15

Why do investors purchase corporate bonds?

Answer 15

To earn interest income, for the repayment of maturity, for the potential increase in value

Question 16

if overall interest rates rise, a corporate bond with a fixed income with most likely:

Answer 16

decrease in value

Question 17

if your monthly expenses total $2,000 total, you should save at least ____________ in an emergency fund before focusing on your investment plan?

Answer 17

$6,000

Question 18

To survive a crisis, what steps should you take?

Answer 18

Establish a larger than usual emergency fund, know what you owe and reduce your spending, notify your lenders if you are unable to make payments, monitor the value of your investment and retirement funds

Question 19

A distribution of money, stocks, or other property that is paid to stockholders of a company is called:

Answer 19

Dividends

Question 20

A stock issued by a stable corporation that generally attracts conservative investors in called:

Answer 20

Blue chip stock

Question 21

What type of account is based on historical numbers

Answer 21

both earnings per share and price earning ratio

Question 22

NYSE stands for:

Answer 22

New York Stock Exchange

Question 23

Mary Sue owns 1,000 shares of QRS Moving Company. QRS pays a yearly dividend of $1.00 per share. What is the total annual dividend that Mary Sue will receive?

Answer 23

$1,000

Question 24

What is a major reason that investor purchase mutual funds

Answer 24

Diversification and professional management

Question 25

How is an ETF similar to a closed - ended account?

Answer 25

1)Shares can be traded on a securities exchange, 2)an investor can purchase as little as one share of a fund,
3) price set by supply/demand, value of investments, and investor expectations,
4)shares can be traded in the over-the-counter market.

Question 26

What type of stock investments from the same company contain Standard & Poor 500 index?

Answer 26

index funds

Question 27

If you start a new job and are offered the opportunity to participate in the company’s 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?

Answer 27

Participating in the retirement account as a way to reduce income taxes, Participating in retirement acct. to get employer’s matching contributions,
Choosing mutual funds from different fund options for your retirement account,
Basing your choice of investments on: age, how long before retire, and risk tolerance

Question 28

How do mutual funds provide returns to their shareholders?

Answer 28

Income dividends, capital gain distributions, capital gain

Question 29

What should you do when it comes to retirement?

Answer 29

Start saving sooner

Question 30

When conducting a financial analysis for retirement planning, you should review:

Answer 30

Housing, life insurance, other investments, assets

Question 31

What is the most valuable asset at retirement?

Answer 31

House

Question 32

When planning for retirement, inflation:

Answer 32

Should be considered, income received earlier in retirement will buy more than amount recorded later

Question 33

Estate planning is:

Answer 33

creating a definite plan for managing property during one’s lifetime and at one’s death

Question 34

A will usually prepared with the help of an attorney is known as a

Answer 34

formal will

Question 35

Your will must be signed by:

Answer 35

you infront of two witnesses

Question 36

As of 2020 the maximum gift that can be given to another person without entering gift taxes is:

Answer 36

$15,000