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Finance Flashcards

Finance 101 Final

Convertible bond:Can be converted into common stock under certain conditions- usually at the owner’s option, for a specified number of shares of the corporation’s common stock.Generally, the coupon rate on a convertible bond is 100 percent lower than the rate paid on traditional bonds.The bond is trading at a high price, and the company wants to bring the price in line with a theoretical ideal range over 1000.All of the above Can be converted into common stock under certain conditions- usually at the owner’s option, for a specified number of shares of the corporation’s common stock.
Which of the following is not correct about investing in bonds?Secured bonds are issued by corporations and tied to physical asset such as real estate or equipment.Zero coupon bonds are issued at deep discount and redeemed at full face value.The junk bond market is very speculative and not for beginners.Bonds represent common stocks/equity and are extremely risky investments. Bonds represent common stocks/equity and are extremely risky investments.
An unsecured bond that is offered on the credit of the corporation and is backed only by the reputation of the issuing corporation is called a(n) ____________ bond.Debenture.Mortgage.Indenture.Preemptive. Debenture.
Which type of bonds have the following properties? These bonds are used to fund large projects such as new plants and equipment that has a long, useful life. Secured bonds and Debentures are two types of these bonds. Canada Treasury Bonds.Europe Agency Bonds.Municipal Township Bonds.Corporate Bonds. Corporate Bonds.
A bond backed by the taxing authority of the government and is considered less risky because taxes can be raised to cover bond repayment if necessary is called a ____________ bond. Debenture.Mortgage.Secured.General obligation bond. General obligation bond.
Bonds represent A debt owed by a governmental unit or a corporation.A defined contribution plan.An equity/common stock with tax-free features.All of the above. A debt owed by a governmental unit or a corporation.
Which of the following bonds are the most secure bonds and the most secured investment, and they are backed by the “full faith and credit” of the U.S. Government?Convertible Bonds and Callable Bonds.US Treasury Bonds.Junk Bonds.Zero Coupon Bonds. US Treasury Bonds.
Which of the following offers a flexible way to save for retirement and uses a wide variety of investment products to fund your account?IRAThe NASDAQ401 B Plan403 K Plan IRA
As investors approach retirement age, they are often more interested in ______ portfolios. Aggressive.International.Risky or equity mix.Conservative or fixed-income. Conservative or fixed-income.
Which of the following is the top professional designation for financial planners?Certified Financial Planner (CFP)Chartered Financial Consultant (ChFC)Certified Public Accountant and Personal Financial Specialist (CPA and PFS)Charter Life Underwriter (CLU) Certified Financial Planner (CFP)
What does an IRA stand for?Investment Retirement Account.Investment Reduction Account.Income Reduction Account.Individual Retirement Account. Individual Retirement Account.
With the Roth IRA, you can withdraw your contributions at any time with no penalty or taxes to pay. After age of ______, you can make withdrawals of contributions and earnings tax-free.49 1/259 1/26770 1/2 59 1/2
The disadvantages of individual IRAs includeThe limits on the amount you can contribute each year.Income restrictions that reduce or eliminate the benefits for people in higher income brackets.Limit on IRA deduction if you are covered by a retirement plan at work.All of the above. All of the above.
Which of the following is correct about retirement accounts?The 401(k) plan is a salary-reduction plan with early withdrawals being always penalty free.The 401(k) and 403 (b) retirement plans are employer-sponsored programs that offer significant benefis.With the Roth IRA, you can withdraw your contributions at any time, but you always pay taxes and penalty.None of the above. The 401(k) and 403 (b) retirement plans are employer-sponsored programs that offer significant benefis.
Which of the following retirement account may be the best option for some people, where you get no current deduction from your income taxes, but your contributions and earnings grow tax-free and the withdrawals at retirements are tax free.Traditional Deductible IRA.408 (K) plan.Roth IRA.Self-Employed IRA. Roth IRA.
The IRS’s definition of financial hardship of withdrawing money early from your IRA without a penalty is (are)Extraordinary medical expenses.The purchase of a home (first-time home buyer).Emergency payments to stop foreclosure or eviction.All of the above All of the above
Which of the following is correct about retirement accounts?The IRS requires you to withdraw a specific minimum amount out of your 401 (k) beginning no later than April 1 the year you turn age 70 1/2.The IRS requires you to withdraw a specific minimum amount out of your 401 (k) beginning no later than April 1 the year you turn age 59 1/2.Roth IRA and traditional IRA are the same retirement accounts, where you can withdraw your contributions at any time without penalty or paying taxes.All of the above. The IRS requires you to withdraw a specific minimum amount out of your 401 (k) beginning no later than April 1 the year you turn age 70 1/2.
You want to convert equity in your home to cash with a reverse mortgage. What should your minimum age be to qualify?59626988 62
Which of the following provides a retirement benefit based on the number of years you have worked and contributed through payroll taxes to the system?Withholding taxSocial SecurityInflationAnnuity Social Security
Medicare is the federal health care program that provides basic services for people age ____ and older5059 1/26265 65
The main advantage of a 401(k) plan is that it:Provides a high rate of return with little risk.Allows you to shelter retirement savings from taxation.Provides a well diversified mix of investment assets.Has no early withdrawal fees. Allows you to shelter retirement savings from taxation.
Withholding tax isCash balance pensions plan that consists of longevity bonus for the number of years worked.An example of qualified retirement account.The Social Security, Medicare, and income tax withheld each payday by employer.401 (k) tax. The Social Security, Medicare, and income tax withheld each payday by employer.
Which of the following is not correctA retirement plan is a detailed plan for the administration and disposition of your property during your lifetime and at your death.Setting a time frame for retirement: both personal and financial decisions.Compounding is the mathematical means by which interest earned during one period adds to the principal, the next period interest is earned on the resulting principal plus interest.Diversified retirement portfolio reduces the risk by spreading investments dollars over numerous stocks and bonds to minimize the impact should one of the investments turn bad. A retirement plan is a detailed plan for the administration and disposition of your property during your lifetime and at your death.
Which retirement plan may use tax-deferred annuities or mutual funds, and it is the retirement plan for religious, educational, and other non-profit groups.401(k) 403(b)401(t)403 (IRA) 403(b)
John and Jane are in their late 20s with two young children. Their near-term financial planning concerns would include all of the following, except:Asset acquisition and debt planning.Employee benefit and Insurance planning.Investment and tax planning.Estate planning. Estate planning.
A _____________ is a qualified defined contribution plan offered by employers. 301(a) account509(re) account401(k) accountNone of the above 401(k) account
Which of the following is not correct?Purchasing power is what your dollars will buy relative to another point in time.Social Security and Medicare were designed to provide a safety net so elderly citizens could count on some income and health care.Medicare insurance plan is only suitable for low-income and disabled people.All of the above. Medicare insurance plan is only suitable for low-income and disabled people.

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