08187900 Managing Investments

08187900 Managing Investments

1. You noticed from the prospectus that the fund you’re considering
is advertised as a no-load INVESTMENT COMPANY , but there are
fees to cover marketing and distribution expenses. These fees
are known as

A. loads. C. commissions.
B. fund expenses. D. 12(b)-1 fees.

2. You know that MUTUAL FUNDS can emphasize various investment
styles or approaches.You’re looking for a diversified portfolio of
investment that generates significant capital appreciation and
provides current income form interest and dividends. The type
of fund you seek is a(n) _______ fund.

A. MONEY MARKET mutual C. balanced
B. growth-and-income D. bond

3. You’re seeking a fund that mirrors the returns and risks of the Standard & Poor’s 500.You should consider a(n)

B. stock unit investment trust. D. INDEX FUND .

4. You’re young and have an investment plan that emphasizes growth.You have a high tolerance for risk. A high percentage of your SAVINGS FOR RETIREMENT should be invested in

A. MONEY MARKET accounts. C. stocks.
B. bonds. D. U.S. Treasury securities.

5. You’re close to retirement and very adverse to risk.You should invest a high percentage of your assets in

A. stocks. C. commodities.
B. real estate. D. bonds.

6. You’re seeking a diversified portfolio to cope with the various types of investment risks. You’re particularly concerned that the value of your securities may be influenced by the performances of other investors. This risk is referred to as _______ risk.

B. business D. liquidity

7. You learned that if you take more risk you should require a higher rate of return. In evaluating how much extra return you get for taking risk, you compare the return form the investment under consideration to

A. risk-free rate of return.
B. the compound rate of return.
C. the after-tax adjusted rate of return.
D. yield to maturity.

8. You’re concerned with the after-tax return from your investments. The lowest tax consequence to a dividend or distribution will be from

A. ordinary dividends. C. stock dividends.
B. short-term gain distribution. D. long-term gain distribution.

9. The performance ratio that best measures the relative value of your investment in stock is

A. return on equity. C. net profit margin.
B. price/earnings ratio. D. earnings per share

10. You don’t want to invest in a limited partnership that isn’t listed on an organized exchange because it won’t be easy to sell if you need cash. The risk that best describes this problem is _______ risk.

A. event C. financial
B. purchasing power D. liquidity

11. You’re concerned with maintaining your standard of living even after the effects of inflation. The risk that best describes this issue is _______ risk.

A. event C. market
B. purchasing power D. liquidity

12. You’ve purchased stock in a company from the underwriter of the company’s stock after reviewing the prospectus for this initial PUBLIC offering. Therefore, you purchase the stock in which market?

A. Over-the-counter market C. The New York Stock Exchange
B. The secondary market D. The primary market

13. The price of the majority of stocks has generally been rising steadily for the past year. This situation is an example of what kind of market?

A. Bull market C. Growth market
B. Pig market D. Bear market

14. Care should be exercised in selecting a securities BROKERAGE FIRM even though such firms are subject to enforcement regulations at the federal level from the

A. National Association of Securities Dealers.
B. Securities Investor Protection Corporation.
C. Securities and Exchange Commission.
D. Securities National Fraud Commission.

15. Which of the following is an advantage of INVESTING IN MUTUAL FUNDS ?

A. MUTUAL FUNDS offer a high level of convenience.
B. MUTUAL FUNDS allow you to target your investment onto one security.
C. Individual investors personally manage the investment decisions.
D. MUTUAL FUNDS require a large investment from their investors.

16. Bonds issued without coupons are called _______ coupon bonds.

A. no C. negative
B. zero D. unsecured

17. With respect to the return on your portfolio of securities, what factor will have the most significant impact?

A. Security selection C. Average rating
B. Average maturity D. Asset allocation

18. A no-load fund has no _______ charges.

A. transaction C. management
B. administrative D. tax

19. INVESTMENT COMPANY earnings come from

A. capital gains.
B. dividend from stocks.
C. interest from bonds.
D. interest, dividends, and capital gains.

20. You’ve invested in a fund that holds commercial office buildings AND APARTMENTS . The fund must distribute its earning to its shareholders.You own shares in a(n)

C. unit investment trust.

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