Finance test #2

A mutual fund prospective is required to fully enclose? True
Investing is the process of placing money in some medium such as stocks or bunds in the expectation of receiving some future benefit? True
A close ended mutual fund is guaranteed, they cannot lose value? False
A perspective describes the firm and the issue of new security? True
The risk free rate of return is often measured by the return on US treasury bills? True
A lower expected return will means a higher risk will have to be expected? False
Retired people often chose investments offering high current income with high risk? False
Changes in the values of securities due to social, political or economical factors are referred to as market risk? True
An open ended investment company is commonly known as a mutual fund? True
Common stocks pay a guarantee dividend each year False
Mutual funds provide professional management and diversification that individual investors, especially those with limited resources, can rarely obtain on their own. True
Investing is considered a short term activity that involves the buying and selling of securities? False
All securities involve risk of some kind? True
The most important advantage of a mutual fund is pooled diversification? True
A funds objective must be stated in its perspectives? True
The federal government regulates securities markets through what? Securities and exchange commission
Stockbrokers are also known as? Account executives
Which of the following investments has the highest liquefy risk? Land
_______ would not be a reason for purchasing a mutual fund? Safety of deposits
During a bear market security prices generally do what? Decline in value
Another name for a mutual fund is? An open ended investment company
A fund that invests only in a particular industry would be a what fund? Sector
A mutual fund allows investors to? Become owners of a widely diversified portfolio of securities
The most common reason given for investing is? Saving for retirement
Corporate ownership is evidenced by what? Common stock
Cash divedends on common stock are most often paid ____ ? Quarterly
The Smith family owns 200 shares of stock. The company declares a 5% stock dividend. How many shares of stock do they now own? 210
Which of the following is an order to sell a stock when the market price drops to or below a specified level? Stop less
Investors tend to use mutual funds for which of the following reasons? All of the above
Companies with a great deal of long term debt, would be considered to have high ______ risk? financial
A underwriter or a persepctives is a document made available to perspective secutirty buyers Perspectives
Speculating or investing is considered to be a long term activity Investing
An order to buy or sell a security at the best price available at the time the order is received is a market or limit order? Market
Bull or bear market is characterized by falling stock prices bear
Ownership in a corporation would be represented by stock or bonds? Stock
Past returns on a investment are an indication or a guarantee of future returns? Indication
A potential high return on a investment will signal a high or low risk exposer? High
The possibility that a corporation miht fail is an economic or business risk? Business
Lower or higher of bonds rating the more likely the issue will default? Lower
Cash or stock dividends are the most common form of dividends? Stock
Common stock holders usually receive one vote per person or per share? Per share
Mutual funds must value their securities monthly or daily? Daily
The actual ownership of a mutual fund is in the hands of the management company or the share holders? Share holders
The primary investment objective of bond mutual funds is is growth or income? Income
The custodian or invesntment adviser buys or sells the bonds and stock and oversees the portfolio Investment adviser
Pubilically traded corporations are required or can choose to provide an annual report? Required
What are the advantages of the ROTH IRA -Allows for after tax contributions with potential for tax free income and retirement -Allows an individual to invest in a wide variety of investments
What are the eligibialty guidelines for a ROTH IRA earned incomehead of household or single
What are the distributaion guidelines? -Money has to be in the account for atleast 5 years-Can take it out at 59 ½-Death of owner of IRA-If you become disabled-First time home buyer

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