Personal Finance Test 4

Which of the following is a true statement? No one is going to make you save the money you need to start an investment program.
An emergency fund should be deposited in a: Savings account at the highest available interest rate.
Twenty years ago, you began investing $2,000 a year. Because your investments earned an average of 8 percent a year, your investment portfolio has a current dollar value of $92,000. How much did you earn on your investments over the 20-year period of time? $52,000
Which of the following investments would rank the highest with regard to safety? Government bonds
If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond with a fixed interest rate? The value of the bond will increase.
The ease with which an investment can be converted to cash without a substantial loss in dollar value is called the: Liquidity factor.
A corporation selling stock is obligated to: Pay dividends to preferred stockholders before dividends are paid to common stockholders.
Normally, corporate bondholders receive interest: Every six months.
A type of investment that combines and invests the funds of many investors and manages it with a professional manager is called a(n): Mutual fund
Apple Computer Corporation holds its annual meeting in April. Maxine Star, who owns stock in the company, cannot attend the meeting. She can vote by: Proxyy
Dividends remain with the stock until: Two business days before the date of record.
Patsy Banz owns 220 shares of General Mills Corporation. For the last calendar quarter, General Mills Corporation paid a dividend of $0.47 a share. What is the total amount she received in her dividend check for this quarter? $103.40
Jo Bower owns 150 shares of Data General stock. She purchased the stock for $24 a share. She sold her stock for $30 a share. The commissions required to buy and sell her stock totaled $120. Assuming that she received no dividends during the time she owned the stock, what is her total return for this transaction? $780
If the board of directors approves a two for one stock split, an investor who owns 150 shares before the split owns ____________ shares after the split. 300
When the board of directors approves a two for one stock split, the price for each share of stock: Decreases in value
The type of preferred stock that may be exchanged at the stockholder’s option for common stock is: Convertible preferred stock
James Turbyfil purchased 100 shares of IBM for $72. James also paid $55 commission. What was the total purchase price for this transaction? $7,255.00
Assume that you purchased 100 shares of Exxon stock for $55 a share, that you received an annual dividend of $2.00 a share, and that you sold your Exxon stock for $65 a share at the end of one year. What is the total return for your investment? (Ignore commission amounts for this question.) $1,200
Assume the beta for the stock market in general is 1.0 and that the beta for World-Wide Television Productions is 2.4. If the stock market increases by 10 percent, how much will the stock for World-Wide Productions increase? 24 percent
A request that a stock be bought or sold at the current market price is called a ____________ order. Market
James Garner just bought the stock of a company. He knows that he will receive a cash payment from the company once a quarter, although the company is not obligated to make this payment. What will he receive? Dividends
Val Kilmer has purchased the stock of the Williams Widget Company. After he buys the stock he is told that the number of shares he owns will be divided into a larger number. In fact, he will get two shares for every share that he owns today. What has happened to this company? Stock split
Sean Connery has purchased the stock of the Stowaway Transportation Company. The company is getting ready to pay a dividend. He knows he must be registered on the corporation’s books on the in order to receive the dividend. Record date
Orlando Bloom is buying the stock of the Getaway Caribbean Cruise Company. However, if he buys the stock today, he knows it is the first day it is selling without the dividend this quarter. What date is Orlando buying the stock on? Ex dividend date
Beverly Frickel purchased 100 shares of Gleason Systems stock for $42.50 per share. Her commission for this purchase was $35. She sold the stock two years later for $55 per share and a commission of $50. While she held the stock it paid a dividend of $1.50 per share. What was Beverly’s total dollar return on this stock? $1315
Trevor Conklin is thinking about buying the preferred stock of Galloway Gems Company. He knows that the dividend is a fixed amount and is determined by taking a percentage of what value? Par value
Assume that you purchased a $1,000 Exxon bond that pays 9 1/2 percent interest. What is the amount of interest you would receive each six months? $47.50
A bond that is backed only by the reputation of the issuing corporation is called a(n) ____________ bond. Debenture
A bond that can be exchanged, at the owner’s option, for a specified number of shares of the corporation’s stock is called a(n) ____________ bond. Convertible
A $l,000 corporate bond is convertible to 25 shares of the corporation’s common stock. What is the minimum price that the stock must obtain before bondholders would consider converting a bond to the company’s common stock? $40
A call feature: Allows the corporation to buy outstanding bonds from current bondholders before the maturity date.
A bond that is registered in the owner’s name by the issuing company is called a ____________ bond. Registered
John Peterson purchased a bond at a price far below its face value, that makes no interest payments, and will be redeemed at its face value at maturity. In all likelihood, he purchased a(n) ____________ bond. Zero-coupon
The type of bond that is not registered in the investor’s name is a ___________ bond. Bearer
If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally: Decrease in value
What is the approximate market value for a $1,000 corporate bond that pays 8 percent interest when comparable bonds are paying 9 percent interest? $889
What is the approximate market value for a $1,000 corporate bond that pays 9 percent interest when comparable bonds are paying 8 percent? $1,125
92. Peter Conrad is buying a mutual fund that is investing in stocks all over the world including the United States. What type of mutual fund has he purchased? A global fund
For most open ended mutual funds, when is net asset value calculated? At the end of each trading day
When one investment company manages a group of mutual funds, it is called a(n): Family of funds
A municipal bond fund: Provides investors with tax-free income
A fee that some investment companies charge for marketing and distributing a mutual fund is called a: 12b-1 fee
A mutual fund that invests in companies outside the United States is called a(n) ____________ fund. International
When a bond is selling for more than its face value, it is said to be selling at a: Premium
A mutual fund in which no sales charge is paid by the individual investor is called a(n) ____________ fund. No-load
Which of the following statements is false? Investors who purchase mutual funds are guaranteed a higher rate of return than a comparable investment in stocks or bonds.
If a bond was quoted in the newspaper at 88 3/4, the price in dollars was $887.50

Leave a Reply

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