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Exam 13: Investing Fundamentals

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Question 51

True/False

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A credit ceiling on a credit card is determined by the borrower and is the dollar amount that they want to borrow using the cash advance provision on their credit card.

A) True
B) False

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Question 52

Multiple Choice

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Which type of risk affects only a specific company or a specific industry?

A) interest rate
B) systematic
C) unsystematic
D) economic
E) inflation

F) A) and E)
G) A) and D)

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Question 53

Multiple Choice

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Brenda Lee has received a $10,000 gift from her mother and is trying to decide how to invest it.She thinks she would like to invest it in stocks because she knows that stocks have been earning about a 10% rate of return over the last several years.What aspect of investing interests Brenda?

If interest rates in the overall economy increase to 8 percent,which one of the following is most likely to be the market value of a $1,000 corporate bond with a fixed interest rate of 7 percent?

When a bondholder loses money because interest rates in the economy increase,it is an example of ____________ risk.

Preferred stock represents the most basic form of corporate ownership.

Sam Waters just received $10,000 from his grandmother's estate.He has thought about buying himself a new Harley with the money but has decided instead to add the money to his mutual fund account.Which suggestion for obtaining the money he needs for investing is he following?

Bob and Mary Martin are both 35 years old.Although they graduated from college almost 15 years ago,they have never developed a diversified investment program.What extra money they had was invested in high-tech stocks that did quite well until the last five years.Then,with the economic downturn,they encountered major losses.How could asset allocation have reduced the dollar amounts of the Martin's losses?

Hugh Jackman is thinking about buying an investment.The investment option that he is thinking about buying is an investment where investors pool their money.One of the key features is that it is managed by professional managers.What investment is Hugh thinking about purchasing?

Which one of the following investments offers the greatest liquidity?

James Gripka has a mutual fund that automatically takes $50 out of his checking account each month.Which suggestion for obtaining the money he needs for investing is he following?

Twenty years ago,you began investing $250 a month.Because your investments earned an average of 8 percent a year,your investment portfolio has a current dollar value of $145,000.How much did you earn on your investments over the 20-year period of time?

The maturity dates for most bonds range between ____________ years.

To manage a financial crisis,many experts recommend that you take action to make sure your financial affairs are in order.Name and describe five steps you can take to ensure that your financial affairs are in order.

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

An example of ____________ risk occurs when an investment does not keep up with prices that are increasing in the overall economy.

The fees for investor services and newsletters usually range between $30 and $1,000 per year.

The potential return of any investment should be directly related to the risk that the investor assumes.

Allison Peavy wants to invest but is worried about risk: In particular,she is worried that bad management and increased competition in the wireless phone market will make these companies less profitable than expected.What type of risk is Allison most concerned with?

After Christmas is over,Ted Riley works hard to control his expenses in February so that he can make an extra payment into a mutual fund.Which suggestion for obtaining the money needs for investing is he following?