Question 1

Which of the following best describes corporate bonds?

Accepted Answer

A)   Short-term debt financing
B)   Bank account
C)   Long-term equity financing
D)   Long-term debt financing
E)   Short-term equity financingF) D) and E)
G) All of the above

Question 2

Jan Murphy is in her early 30s and would like some help choosing an investment that will grow over the next 10 years.Which of the following investments would you recommend for growth?

Accepted Answer

A)   Savings accounts
B)   Corporate bonds
C)   Municipal bonds
D)   Common stock
E)   Government bondsF) A) and D)
G) B) and C)

Question 3

Which of the following is not a characteristic of common stock?

Accepted Answer

A)   Shares can be sold for a capital gain if the price of the stock increases.
B)   The firm has no legal obligation to pay dividends to stockholders.
C)   An increase or decrease in the market value of the stock will have a corresponding effect on the value of the investment.
D)   Each share of stock represents debt for the corporation.
E)   Cash dividends are generally paid on a quarterly basis.F) B) and D)
G) B) and E)

Question 4

Barry Ferrell has a monthly income of $2,500.His monthly expenses are $2,000.What amount is recommended for someone in Barry's situation to set aside to establish an emergency fund?

Accepted Answer

A)   $2,000
B)   $2,500
C)   $7,500
D)   $6,000
E)   $1,500F) B) and E)
G) B) and D)

Question 5

Which of the following would not satisfy the safety factor of investing?

Accepted Answer

A)   Savings accounts
B)   Blue-chip stocks
C)   Certificates of deposit
D)   Highly rated municipal bonds
E)   Antiques and collectiblesF) C) and E)
G) A) and E)

Question 6

Dillon owns a $1,000 corporate bond.He receives semiannual payments of $35 for his bond.What is the bond's stated interest rate?

Accepted Answer

A)   3.5 percent
B)   5 percent
C)   7 percent
D)   8 percent
E)   10 percentF) All of the above
G) D) and E)

Question 7

In order to reach goals of high dollar returns on your investments,what must you generally give up?

Accepted Answer

A)   Risk
B)   Safety
C)   Stocks
D)   Money
E)   ReturnF) B) and E)
G) A) and B)

Question 8

Which of the following is not one of the types of bonds issued by the U.S.federal government?

Accepted Answer

A)   Treasury notes
B)   Savings bonds
C)   Treasury municipals
D)   Treasury billsE) B) and C)
F) None of the above

Question 9

To get the proper financial counseling,Marquis and Marta Jacobs made an appointment with Harry Hanstein.Harry has had two years of training in securities,insurance,taxation,retirement planning,and estate planning and has passed a rigorous qualifying examination given by the Certified Financial Planner Board of Standards in Denver.Which of the following most narrowly describes Harry's occupation?

Accepted Answer

A)   Real estate broker
B)   Stockbroker
C)   Certified public accountant
D)   Tax consultant
E)   Certified financial plannerF) A) and B)
G) A) and E)

Question 10

Which of the following statements is most in keeping with investment counselors' suggestions for investment goals?

Accepted Answer

A)   By January 20XX,I will have total assets of $180,000.
B)   I want to invest to earn money with money.
C)   In 20 years or so,I want to have $10,000 in a bank account.
D)   I want to invest in stock that is growing.
E)   By December 20XX or 20XX,I want to hold stocks in a Fortune 500 company.F) A) and E)
G) A) and C)

Question 11

What are the most conservative of all investments?

Accepted Answer

A)   Municipal bonds
B)   Bank accounts
C)   Common stocks
D)   Corporate bonds
E)   Mutual fundsF) B) and D)
G) All of the above

Question 12

Which of the following would most likely be classified as a traditional investment?

Accepted Answer

A)   Common stock issued by new corporations
B)   Mutual funds
C)   Corporate bonds
D)   Market order
E)   Savings accountF) B) and E)
G) A) and E) C

Question 13

Which of the following best explains the purpose of asset allocation?

Accepted Answer

A)   Reduce commission charges
B)   Increase investment risk
C)   Reduce government fees associated with investing
D)   Reduce taxes paid to the IRS
E)   Reduce investment riskF) C) and D)
G) A) and D) E

Question 14

What would cause a corporate bond with a $1,000 face value and a fixed interest rate of 7 percent to increase in value?

Accepted Answer

A)   The bond receives a lower rating by Moody's or Standard & Poor's.
B)   Overall interest rates in the economy increase.
C)   The government places an interest ceiling on corporate bonds.
D)   Overall interest rates in the economy decrease.
E)   The corporation files for protection under the bankruptcy laws.F) C) and E)
G) None of the above D

Question 15

How much money do most investment counselors recommend that an individual save for an emergency fund?

Accepted Answer

A)   One month's living expenses
B)   One month's gross salary
C)   Two times the take-home salary
D)   Three months' living expenses
E)   Nine months' living expensesF) B) and D)
G) C) and D)

Question 16

Since Mike and Carol are nearing retirement age,they are concerned with the need for their investments to provide income.If you were a financial planner,which of the following would you not recommend to Mike and Carol as an investment?

Accepted Answer

A)   Blue-chip stocks known for paying dividends
B)   Stocks of high-growth companies
C)   Corporate bonds
D)   Government bonds
E)   Certificates of depositF) A) and C)
G) None of the above

Question 17

Kaitlyn purchases a $1,000 corporate bond with a fixed interest rate of 5 percent for $900.What is the most likely explanation for this apparent bargain?

Accepted Answer

A)   Overall interest rates in the economy increase.
B)   Someone just wanted to get rid of the bond quickly.
C)   The bond receives a better rating by Standard & Poor's or Moody's.
D)   Overall interest rates in the economy decrease.
E)   The company just introduced a new product.F) A) and C)
G) A) and E)

Question 18

What is the name of a government security that is sold in minimum units of $100 and has maturities that may be as long as one year?

Accepted Answer

A)   Series EE savings bond
B)   U.S.savings bond
C)   Treasury bond
D)   Treasury note
E)   Treasury billF) A) and B)
G) A) and C)

Question 19

If Martie Brown,a retiree asked for your help choosing an investment that will provide a steady source of income,which of the following would be the best for you recommend?

Accepted Answer

A)   Growth stocks
B)   Certificates of deposit
C)   Margin investments
D)   Low-rated muni bonds
E)   High-risk corporate bondsF) B) and C)
G) A) and C)

Question 20

What is the name given to a bond issued by a state or local government?

Accepted Answer

A)   State treasury note
B)   State treasury bond
C)   Corporate bond
D)   Municipal bondE) A) and D)
F) A) and C)

Exam 17: Understanding Personal Finances and Investments

Which of the following best describes corporate bonds?

Correct Answer
verified

Jan Murphy is in her early 30s and would like some help choosing an investment that will grow over the next 10 years.Which of the following investments would you recommend for growth?

Correct Answer
verified

Which of the following is not a characteristic of common stock?

Correct Answer
verified

Barry Ferrell has a monthly income of $2,500.His monthly expenses are $2,000.What amount is recommended for someone in Barry's situation to set aside to establish an emergency fund?

Correct Answer
verified

Which of the following would not satisfy the safety factor of investing?

Correct Answer
verified

Dillon owns a $1,000 corporate bond.He receives semiannual payments of $35 for his bond.What is the bond's stated interest rate?

Correct Answer
verified

In order to reach goals of high dollar returns on your investments,what must you generally give up?

Correct Answer
verified

Which of the following is not one of the types of bonds issued by the U.S.federal government?

Correct Answer
verified

Correct Answer
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Which of the following statements is most in keeping with investment counselors' suggestions for investment goals?

Correct Answer
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What are the most conservative of all investments?

Correct Answer
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Which of the following would most likely be classified as a traditional investment?

Correct Answer
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C

Which of the following best explains the purpose of asset allocation?

Correct Answer
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E

What would cause a corporate bond with a $1,000 face value and a fixed interest rate of 7 percent to increase in value?

Correct Answer
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D

How much money do most investment counselors recommend that an individual save for an emergency fund?

Correct Answer
verified

Since Mike and Carol are nearing retirement age,they are concerned with the need for their investments to provide income.If you were a financial planner,which of the following would you not recommend to Mike and Carol as an investment?

Correct Answer
verified

Kaitlyn purchases a $1,000 corporate bond with a fixed interest rate of 5 percent for $900.What is the most likely explanation for this apparent bargain?

Correct Answer
verified

What is the name of a government security that is sold in minimum units of $100 and has maturities that may be as long as one year?

Correct Answer
verified

If Martie Brown,a retiree asked for your help choosing an investment that will provide a steady source of income,which of the following would be the best for you recommend?

Correct Answer
verified

What is the name given to a bond issued by a state or local government?

Correct Answer
verified

Exam 17: Understanding Personal Finances and Investments

Which of the following best describes corporate bonds?

Correct AnswerverifiedShow Answer

Jan Murphy is in her early 30s and would like some help choosing an investment that will grow over the next 10 years.Which of the following investments would you recommend for growth?

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of common stock?

Correct AnswerverifiedShow Answer

Barry Ferrell has a monthly income of $2,500.His monthly expenses are $2,000.What amount is recommended for someone in Barry's situation to set aside to establish an emergency fund?

Correct AnswerverifiedShow Answer

Which of the following would not satisfy the safety factor of investing?

Correct AnswerverifiedShow Answer

Dillon owns a $1,000 corporate bond.He receives semiannual payments of $35 for his bond.What is the bond's stated interest rate?

Correct AnswerverifiedShow Answer

In order to reach goals of high dollar returns on your investments,what must you generally give up?

Correct AnswerverifiedShow Answer

Which of the following is not one of the types of bonds issued by the U.S.federal government?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is most in keeping with investment counselors' suggestions for investment goals?

Correct AnswerverifiedShow Answer

What are the most conservative of all investments?

Correct AnswerverifiedShow Answer

Which of the following would most likely be classified as a traditional investment?

Correct AnswerverifiedC

Which of the following best explains the purpose of asset allocation?

Correct AnswerverifiedE

What would cause a corporate bond with a $1,000 face value and a fixed interest rate of 7 percent to increase in value?

Correct AnswerverifiedD

How much money do most investment counselors recommend that an individual save for an emergency fund?

Correct AnswerverifiedShow Answer

Since Mike and Carol are nearing retirement age,they are concerned with the need for their investments to provide income.If you were a financial planner,which of the following would you not recommend to Mike and Carol as an investment?

Correct AnswerverifiedShow Answer

Kaitlyn purchases a $1,000 corporate bond with a fixed interest rate of 5 percent for $900.What is the most likely explanation for this apparent bargain?

Correct AnswerverifiedShow Answer

What is the name of a government security that is sold in minimum units of $100 and has maturities that may be as long as one year?

Correct AnswerverifiedShow Answer

If Martie Brown,a retiree asked for your help choosing an investment that will provide a steady source of income,which of the following would be the best for you recommend?

Correct AnswerverifiedShow Answer

What is the name given to a bond issued by a state or local government?

Correct AnswerverifiedShow Answer

Correct Answer
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C

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E

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D

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