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Exam 13: Investing Fundamentals

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Question 31

Multiple Choice

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Alice Cooper contributes ten percent of her monthly earnings to her 401(k) plan at work.The plan allows her to invest in several different types of mutual funds and her employer matches up to 5% of her salary.Which suggestion for obtaining the money she needs for investing is she following?

A) paying herself first
B) taking advantage of employer-sponsored retirement programs
C) participating in an elective savings program
D) making a special effort once or twice a year to save
E) taking advantage of gifts,inheritance and other windfalls

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Question 32

Multiple Choice

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A bankruptcy will remain on your credit report for __________ year(s) .

A) 2
B) up to 10
C) no more than 7
D) 20 or more
E) 2 to 4

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Question 33

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Which one of the following investments would provide the most predictable source of income?

There is no relationship between risk and safety.

The fees for investor services and newsletters generally range from ____________ a year.

All of the following statements are considered to be good advice for a potential investor starting an investment program except:

Potential investors should not wait until they put their financial affairs in order before starting to invest.

The most important priority for an investor in preferred stock is receiving cash dividends before common stockholders are paid any cash dividends.

What is the primary goal of asset allocation?

All except which one of the following are good ways to acquire money for starting an investment program?

Today,federal,state,and local governments and most corporations have a home page where you can obtain valuable information.

Garrett Jennings is thinking about buying an investment that represents the most basic form of business ownership and pays a dividend.The dividend on this investment is paid after all other payments and dividends have been made.Which investment is Garrett thinking about purchasing?

Describe the sources of investment information investors can use to evaluate a potential investment.

An investment that an investor expects will increase in value is known as a growth investment.

An investor concerned with a predictable source of income provided by an investment would choose:

The average investor cannot afford to purchase much of the investment information available from the U.S.government.

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?

One risk associated with a global investment is the difficulty of obtaining reliable accounting information needed to evaluate stocks issued by international companies.

Choose four of the investment alternatives presented in Chapter 13 and describe how the factors of safety,risk,income,growth,and liquidity affect that investment alternative.

Which of the following features does not accurately describe a line of credit?