Final Personal Finance Chap 13-15

_________risk exists when there is no potential for gain, only the possibility of loss. Pure – A
Joy McCall purchased 100 shares of PAC stock for $20 per share and sold this same stock one year later for $25 per share … 28.50 percent – C((100 (25-20) – 60 -70) + (100 2)/100*20
Which investment would NOT be an appropriate choice for a conservative investor? Aggressive growth stocks – A
____________ are located at the base of the investment risk pyramid. Treasury securities – D
By investing in alternatives that are higher on the investment pyramid, one is exposed to _____________ risk to his or her capital and ___________ risk of loss purchasing power. Increasing; decreasing – B
Bert Jones ahs invested all of his savings in a choice piece of downtown Midland real estate…… His problem is an example of ___________ risk. Marketability – D
Diversification __________ risk, and leverage ___________ risk. decreases; increases – D
Using borrowed funds to make an investment is called … Leverage – B
If one is in the 25% marginal tax bracket, he or she will have an after. tax income of ______________- from an investment that pays $1500 in taxable income $1125 – B
Historically _____________has (have) offered good protection against inflation. real estate – A
A _____________ in the market is a person who expects securities prices to go up; a ____________ expects the general market to decline. Bull; bear – C
An investor who reduces random risk by investing in a variety of types of investments is using …. portfolio diversification – D
The investment strategy that requires the percentage of dollars invested in stocks, bonds, and cash to remain fixed over a long period of time is called ….. asset allocation – C
__________ is (are) the portion of a company’s earnings that the firm pays out to its shareholders. Dividends – B
Market risk is also known as … Systematic Risk – C
If your time horizon is 6 – 10 years and your portfolio consists of 10% cash, 30% bonds and 60% stocks, you would be considered to have a(n) ___________________ investment. Moderate – B
The claims of security owners in a corporation are satisfied in the following order: Bondholders, preferred stockholders, common stockholders – A
common stock owners typically expect to make money on stocks by receiving…. Dividends and capital gains – C
Preferred stock that pays the stockholder previously skipped dividends before the common stockholders can be paid any dividends is called ______________ preferred stock. Cumulative – A
A Bond is an interest bearing negotiable certificate of long term debt issued by … A corporationA MunicipalityThe federal governmentANY OF THESE – D
The after tax earnings of a corporation that are NOT paid out to stockholders are called …. retained earnings – A
Hill country pools. Inc. had after tax earnings of $750000 and paid out dividends of $325000. there are 275000 shares of Hill country pools common stock outstanding with a current market value of $27 a share … what is the dividend payout ratio for this company? 43$ – B 325000/750000
MAX corporation stock is currently selling for $38 a share, and it pays a quarterly dividend of $0.25. What is the dividend yield on MAX corporation? 2.6% – B .25 *4 = 1.001.00/38 = 0.0263 *100 = 2.6
The cash dividend return to an investor expressed as a percentage of the price of a security is a … dividend yield – B
A company’s net worth is known as its ___________ value Book – A
Rob Lopez purchased 100 shares of Clark… 3.0 percent – C100/30 = 0.90 annually0.90/30 = 0.0300 *100 = 30
Genie Corporation recently declared a three for one stock split……you now own _______ shares worth approx _________ per share 300; 33
The term used to evaluate the profitability of a firm on a common stock per share basis is … earnings per share – B
Companies that consistently pay out higher than average cash dividends are classified as _____________ stocks Income – A
Current shareholders generally have the right to buy additional shares in the company before new shares of the company’s stock are offered to the public. This is called ______________ rights. Preemptive – A
An investor using the fundamental approach would look at… The Management of the company.The outlook for the profitability of the industryThe value of an individual companyALL OF THESE – D
A company that has a capitalization of less than $750 million is called a ___________ stock Mid cap – B
The legal document detailing the debtors responsibilities regarding the bond issue is called the …. Indenture – D
If Moody’s downgrades a bond, which of the following would fall? Market Price – B
The ____________ of a bond is variable. Purchase price – D
An investor can make money on bond investments by receiving…. Both interest and capital gains – D
Closed – end investments companies Issue a limited and fixed number of shares – B
Mutual fund investors must pay federal income taxes on … Ordinary income dividend distributionsCapital gains distributionsCapital gains from selling their sharesALL OF THESE- D
Mutual fund investors expect to profit from their investments through the receipt of dividend income and Price appreciation – C
Interest earned on ________ funds is tax exempt Municipal Bond – D
Value funds specialize ins securities of companies that are … Underpriced – B
Switching privileges on mutual funds allow shareholders to exchange shares of one mutual fund for shares of …. any mutual fund in the same family of funds – C
Laura Larkin invested $4000 in a mutual fund with a stated load of 6%. How much of her money was actually invested in shares of the mutual fund? 3760 – D4000 * 0.06 = 2404000 – 240 = 3760
A mutual fund that does not assess a sales charge at the time of the investment purchase is called a ___________ fund. No load – B
The normal operating costs of the business that are deducted from mutual fund assets before earnings are distributed to shareholders are called …. annual funder operating expenses – C
Compute the net asset value for a share of a mutual fund with the following characteristics…… 22.76 – B177,000,000-12,000,000 = 165,000,000165,000,000/7,250,000 = 22.7586
Advantages of mutual funds include… DiversificationProfessional ManagementLiquidityALL OF THESE – D
___________funds invest in high yield, high risk corporate bonds. Junk bond – B
Periodic, systematic investment in mutual funds is an example of ….. dollar cost averaging – C
Spiders are a type of … ETF
________________ invest in highly liquid, relatively safe securities with very short maturities. Money market funds – D
__________ started the Vanguard mutual fund company. John Bogle

Leave a Reply

Your email address will not be published. Required fields are marked *