Money Matters: 5th 6wks Test Review (Ch. 16-20) - Odd
Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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Ch 18. Investing In Bonds
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1.
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One main distinction between stocks and bonds is that
a. | bonds represent equity, not debt. | b. | unlike stock dividends, a bond’s interest
does not go up and down. | c. | corporations are required to pay dividends on
stocks but not bonds. | d. | bonds are shares of ownership in a corporation,
not loans. |
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2.
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An investment-grade bond
a. | is highly speculative | b. | has no rating at all. | c. | offers the highest
possible yield | d. | is considered the highest-quality, lowest-risk bond. |
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3.
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Which of the following types of bonds cannot be purchased through
TreasuryDirect?
a. | Treasury securities | c. | Series EE savings bonds | b. | Series I savings
bonds | d. | corporate
bonds |
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4.
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Corporations usually agree not to call bonds for the first ___ years after
issuance.
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5.
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A type of corporate bond based on the general creditworthiness of the company is
called a(n)
a. | mortgage bond. | c. | annuity | b. | debenture | d. | secured bond |
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6.
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Bond prices
a. | can never change once you’ve purchased a bond. | b. | tend to react in the
same direction of stock prices. | c. | are by law always lower than stock
prices. | d. | tend to remain steadier than stock prices |
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7.
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When a bond issuer cannot meet the interest and/or principal payments, what has
occurred?
a. | short selling | c. | bond redemption | b. | hedging | d. | bond default |
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8.
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The amount a bondholder will be paid at maturity is called
a. | face value | c. | market value. | b. | dividend. | d. | yield. |
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9.
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When bonds sell for more than their face value, they are selling at a
a. | premium | c. | capital gain | b. | discount | d. | cut rate. |
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10.
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A revenue bond is a type of municipal bond that
a. | finances public-works projects such as airports and hospitals. | b. | is backed by the
power of the issuing government to levy taxes to pay back the debt. | c. | is repaid with the
government’s general revenue and borrowings. | d. | is backed by specific assets that serve as
security to assure repayment of the debt. |
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Ch 19 - Mutual Funds, Real Estate, and Other
Choices
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11.
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Advantages of investing in mutual funds include all of the following
except
a. | professional management | c. | a guaranteed rate of
return | b. | diversification | d. | liquidity |
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12.
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Which of the following tells you the market price for a share of a mutual
fund?
a. | market value | c. | par value | b. | net asset value | d. | face value |
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13.
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A professionally managed group of investments bought using a pool of money from
many investors is called a
a. | savings bond | c. | mutual fund | b. | Ponzi scheme | d. | passbook
account |
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14.
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To reduce risk, you should choose a mutual fund company with all of the
following characteristics except
a. | it provides customers with easy-to-read statements | b. | it has been in
business for a minimum of five years | c. | it is a large company that manages investments
for millions of investors | d. | it exists both in brick-and-mortar and in
cyberspace |
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15.
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Farm products (such as wheat, corn, and cattle) and metals (such as gold and
silver) are called
a. | futures | c. | options | b. | commodities | d. | collectibles |
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16.
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A building with two separate living quarters is called a
a. | duplex | c. | condo | b. | triplex | d. | quad |
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17.
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What is the goal of an income fund?
a. | to earn returns from both dividends and capital gains | b. | to produce current
income in the form of interest or dividends | c. | to earn returns from capital gains
alone | d. | to produce current income from interest alone |
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18.
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An investment in a pool of mortgages that have been purchased by a government
agency is a
a. | real estate investment trust | c. | derivative
mortgage | b. | real estate syndicate | d. | certificate of participation |
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19.
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Which of the following is a sales charge paid when you sell an
investment?
a. | capital gain | c. | front-end load | b. | back-end load | d. | dividend |
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20.
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Which of the following is the most risky investment?
a. | money market fund | c. | income fund | b. | growth fund | d. | growth and income
fund |
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Ch. 20 Retirement and Estate
Planning
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21.
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Because of inflation,
a. | price increases boost buying power. | b. | retired individuals sometimes find it difficult
to maintain their standard of living. | c. | the cost of living goes down over time for
seniors. | d. | all retired individuals need to work at part-time
jobs. |
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22.
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A will written in a person’s own handwriting is called a
a. | codicil | c. | simple will. | b. | holographic will | d. | trust will. |
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23.
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In addition to safeguarding retirement plans from employer mismanagement, the
Employee Retirement Income Security Act does all of the following except
a. | penalize employers who do not provide retirement plans for their
employees | b. | require that all participants be treated equally under the plan | c. | guarantee payment of
certain benefits if a defined-benefit plan is terminated | d. | require employers to
provide participants with information about the plan's features and
funding |
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24.
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In 2014, Deborah gave Richard a gift of $12,000. What are the tax
implications?
a. | Deborah would have to pay a gift tax. | b. | No one would have to pay tax because the amount
of the gift is too small to be taxable. | c. | Richard would have to pay a gift
tax. | d. | Richard would have to pay an inheritance tax. |
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25.
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A Roth IRA differs from a traditional IRA in that
a. | contributions are taxed but earnings are not. | b. | contributions are
not tax-deductible. | c. | earnings as well as contributions are taxed
when you withdraw the money at retirement. | d. | there is no penalty for early
withdrawal. |
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26.
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The amount for which you could sell your home now is its
a. | true value | c. | appraised value | b. | assessed value | d. | current market
value |
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27.
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A tax-deferred retirement plan available to small businesses is a
a. | defined-benefit plan | b. | Simplified Employee Pension (SEP)
plan | c. | Keogh plan | d. | money market
plan |
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28.
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A legal document authorizing someone to act on your behalf is called a
a. | codicil. | c. | inter vivos | b. | joint tenancy agreement | d. | power of
attorney |
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29.
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Many financial advisers suggest that you will need between __________ percent of
your preretirement income to live comfortably
a. | 75 and 85 | c. | 95 and 100 | b. | 50 and 60 | d. | 60 and 75 |
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30.
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Social Security replaces about ____ percent of an average wage earner's
income after retiring.
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Ch 16 - Investing for the
Future
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31.
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Which of the following would be considered the lowest risk
investment?
a. | a stock | c. | an annuity | b. | a corporate bond | d. | real estate |
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32.
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All of the following are wise investment practices except
a. | define your financial goals | b. | make your decisions quickly to take advantage
of the market | c. | seek good investment advice | d. | keep good financial
records |
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33.
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This type of risk is caused by the business cycle.
a. | interest-rate risk | c. | industry risk | b. | market risk | d. | political risk |
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34.
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Maximization of return in the next five to ten years is the goal of which
investment strategy?
a. | strategic investing | c. | speculation | b. | initial investing | d. | systematic
investing |
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35.
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The use of long-term savings to earn a financial reward is called
a. | diversifying | c. | speculating | b. | investing | d. | gambling |
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36.
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A daily newspaper that provides detailed coverage of the business and financial
world is
a. | Barron’s | c. | Kiplinger’s Personal Finance. | b. | The
Economist | d. | The Wall
Street Journal |
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37.
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According to the Rule of 72, if an investment of $5,000 is yielding an average
of 6 percent, it will take ___ years for that investment to be worth $10,000.
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38.
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Professional investment planners who are trained to give investment advice based
on your goals, age, lifestyle, and other factors are called
a. | day traders | c. | certified public accountants | b. | certified financial
planners | d. | discount
brokers |
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39.
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The right, but not the obligation, to buy or sell a commodity or stock for a
specified price within a specified time period is called a(n)
a. | annuity | c. | future | b. | discount bond | d. | option |
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40.
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Which of the following is typically the first stage of investing?
a. | a put-and-take account | c. | speculation | b. | systematic investing | d. | strategic
investing |
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Ch. 17 - Investing in Stocks
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41.
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Which of the following would be considered an odd lot of stocks?
a. | 200 shares | c. | 50 shares | b. | 100 shares | d. | 1,000 shares |
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42.
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A common stock
a. | is less risky than preferred stock | b. | allows stockholders to influence corporate
policy. | c. | has no voting rights. | d. | pays a fixed
dividend. |
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43.
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An increase in the value of a stock over time is called a(n)
a. | capital gain | c. | investment | b. | yield | d. | dividend |
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44.
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Current Profit on Stock ÷ Purchase Price + Commission =
a. | Return on Investment | c. | Net Yield | b. | Earnings per Share | d. | Interest Rate |
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45.
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Which of the following investment techniques would more likely be used by a day
trader?
a. | buying and holding | c. | dollar-cost averaging | b. | buying on
margin | d. | reinvesting
dividends |
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46.
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The price for which a stock is bought and sold in the marketplace is called
the
a. | par value | c. | market value | b. | dividend | d. | yield |
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47.
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Stocks in young, often small corporations that have higher overall risk than
stocks of successful, long-established companies are called
a. | defensive stocks | c. | emerging stocks | b. | growth stocks | d. | blue chip
stocks |
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48.
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Which of the following is not a securities exchange?
a. | OTCBB | b. | NYSE | c. | NASDAQ | d. | all of the above are securities
exchanges |
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49.
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The price of a share of stock divided by the corporation’s earnings over
the past 12 months is the
a. | earnings per share | c. | P/E ratio | b. | ROI | d. | percent yield |
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50.
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Using dividends previously earned on a stock to buy more shares is called
a. | short selling | c. | direct investment | b. | preferred reinvestment | d. | dividend
reinvestment |
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