question

A bond selling below par value is selling at

answer

a discount

question

Value funds look for stocks with relatively all the following except

answer

rapid growth

question

Home Appliance Warehouse, Inc. would like to set up a retirement plan for its employees that encourages employees to save for their own retirement. The company is willing to match employee contributions. Which of the following plans would be appropriate in this situation?

answer

401(k) plan

question

Which of the following was not an intention of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?

answer

recapitalize banks

question

A no-load fund has no

answer

administrative charges

question

In investment terminology, selling stock that you have borrowed is known as a

answer

short sale

question

Which of the following bond mutual funds would provide tax-free income?

answer

municipal bond fund

question

The purpose of the social security retirement program is to

answer

provide a basic adequate income to eligible retirees

question

Which of the following are characteristic of exchange-traded mutual funds?

answer

traded on listed exchanges

question

The Employee Retirement Income Security Act (ERISA) provides

answer

minimum standards for retirement plans

question

You have been offered an opportunity to buy shares of a diversified collection of securities. You will be investing in

answer

mutual funds

question

Normal retirement age is typically defined as ___ years of age

answer

65

question

What are the tax characteristics of qualified retirement plans?

answer

All of the above are characteristics

question

Both load and no-load funds will always charge a

answer

management fee

question

A company has a beta of 1.0; if the market goes down by 8%, the value of the company's stock will

answer

decline 8%

question

An estate plan would be least likely to need revision when

answer

a son graduated from college

question

Buying on margin is buying

answer

with borrowed funds

question

Back end loaded mutual funds are most appropriate for

answer

an investor with a short time horizon

question

The biggest unknown factor that retirees have when estimating their retirement needs and income is

answer

inflation

question

Portfolio management involves making decisions in order to

answer

meet your investment needs and objectives

question

Corporate ownership is evidenced by

answer

common stock

question

Which of the following is an order to sell a stock when the market price drops to or below a specified level?

answer

stop loss order

question

The current market value of all the securities a mutual fund owns is called the

answer

net asset value

question

Having money taken automatically from your paycheck and put into a mutual fund is an example of

answer

an automatic investment plan

question

An unmarried investor with few responsibilities should be able to accept ___ better than two people who are married with young children

answer

risk

question

Your real and personal property that can be transferred according to the terms of a will is called your

answer

probate estate

question

A group of funds managed by a single company which offers conversion privileges is called a

answer

fund family

question

Advantages of exchange traded funds over mutual funds include all of the following except

answer

better diversification

question

Employees of a nonprofit corporation can contribute to a(n)

answer

403(b)

question

Attractive features of a 401(k) plan can include

answer

matching contributions and tax deferral

question

A codicil is a(n)

answer

revision to a will

question

If you die without a will you are said to have died

answer

intestate

question

A fund that invests only in a particular industry would be a ___ fund

answer

sector

question

Stockbrokers are also known as

answer

account executives

question

What type of REIT is most attractive to income oriented investors?

answer

mortgage

question

A balanced fund that emphasizes growth in capital is called a(n)

answer

growth and income fund

question

Risk and return are ___ related

answer

directly

question

Bond prices and current interest rates are ___ related

answer

inversely

question

Instructing your broker to buy or sell a stock at a particular prices is a

answer

limit order

question

The major advantage of mutual funds to the small investor is

answer

diversification

question

A ___ plan combines some of the features of a defined contribution plan with features of a defined benefit plan to produce a plan that is more portable than a traditional defined benefit plan

answer

cash balance

question

Annuities are administered by

answer

insurance companies

question

The major mistake(s) people make in retirement planning is(are)

answer

saving too little

question

The probate estate consists of

answer

all of the above

question

Annual increases in the social security benefit check are related to

answer

current cost of living

question

An immediate order to buy or sell common stock at the best price is a

answer

market order

question

During a bear market, security prices generally

answer

decline in value

question

Which of the following types of risk affect owners of fixed income securities more than owners of equity securities

answer

purchasing power risk

question

A convertible bond is usually a

answer

debenture

question

During a bull market

answer

prices go up

question

The need for retirement planning is increased by the uncertainties of

answer

all of these

question

The goal of estate planning is to

answer

all of the above

question

If a company's common stock is traded on an exchange, the company is said to be

answer

listed on the exchange

question

A characteristic of defensive stocks is

answer

price stability in economic decline

question

Mary Ann contributed $5,000 to her 401(k) plan. If Mary Ann is in the 15% marginal tax bracket, this retirement contribution saved her approximately ___ in federal income taxes

answer

$750

question

The approximate yield-to-maturity of a bond is greater than the stated rate of interest when

answer

purchased at discount

question

Major sources of retirement income include

answer

all of these

question

The federal government regulates securities markets through the

answer

Securities and Exchange Commission

question

Selling equities you don't own and buying them back to cover the sale is

answer

short selling in anticipation of a bear market in that security

question

The most widely followed stock average is the

answer

Dow Jones Industrial Average

question

Bonds issued by subdivisions of the U.S. government but not guaranteed by the government are called

answer

agency bonds

question

When setting retirement goals you should consider

answer

all of these

question

The first step in retirement planning is to

answer

set retirement goals

question

In which of the following type of investment is the most liquidity risk?

answer

land

question

Which of the following statements about preferred stock is true?

answer

dividends must generally be paid to preferred shareholders before dividends may be paid to common shareholders

question

A Roth IRA

answer

all of the above are true

question

Stock profitability is often measured by

answer

return on equity

question

Which of the following is an advantage of owning growth stocks?

answer

low PE ratio

question

The proceeds of a variable annuity are dependent on the

answer

investment return

question

An example of a type of plan where the amount the employee receives at retirement is dependent on investment return is a

answer

defined contribution plan

question

The easiest way to invest in foreign stock is to purchase

answer

international mutual funds

question

In order to avoid penalties, one must typically start taking minimum distributions from most retirement accounts by age

answer

70 1/2

question

You will receive the largest monthly payment under an annuity contract when the selected payment option is the

answer

life annuity with no refund

question

The Smith family owns 200 shares of Elta stock. The company declared a 5% stock dividend. The Smiths now own

answer

210 shares

question

One can maximize the monthly Social Security benefit amount by delaying taking retirement benefits until age

answer

70

question

A(n) ___ actually runs the portfolio and makes the buy and sell decisions

answer

money manager

question

The most common reason given for investing is

answer

saving for retirement

question

An essential ingredient of an effective investment strategy is

answer

enough money to diversify

question

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is a

answer

Profit sharing plan

question

Cash dividends on common stock are most often paid

answer

quarterly

question

The fund whose main objective is to simply match the market known as a(n) ____ fund

answer

none of these

question

A mutual fund allows investors to

answer

become owners of a widely diversified portfolio of securities

question

Only the strongest, most stable and safe-return companies can be called

answer

blue chip stocks

question

A stock portfolio containing 80% common stock is most likely to be appropriate for

answer

a young single worker putting money aside for retirement

question

You should review your estate plan every

answer

3-5 years

question

Redeeming your mutual fund shares might result in a charge called

answer

a back-end load

question

A high inflation rate would result in a high degree of

answer

purchasing power risk

question

Employee contributions to ___ plans do not reduce taxable income

answer

thrift and savings

question

A mutual fund with an objective of both growth and income is a(n)

answer

balanced fund

question

Social security benefits for retirees less than 65 years of age may be reduced if

answer

wages and salaries exceed certain limits

question

Fully insured status requires 40 ___ of employment covered by social security

answer

quarters

question

In you withdraw funds from a pension plan before age 59 1/2, you will have to pay a ___ federal income tax penalty

answer

10%

question

The maximum sales charge a no load mutual fund can charge

answer

none of these

question

Funds to finance social security come from

answer

compulsory contributions from employee, employer, and self-employed

question

Self directed retirement accounts aimed at self-employed persons include

answer

401(k)

question

When cash dividends on stock are paid, but the stockholder has these dividends automatically reinvested, what are the federal income tax implications?

answer

Taxes must be paid in the year the dividends are paid at ordinary income tax rates

question

The amount of money in your defined contribution retirement portfolio will depend on

answer

all of these

question

To most stockholders, the main advantages of common stock investment are

answer

attractive returns and active trading

question

The following mutual fund fees are paid directly from the investor

answer

Annual Account Maintenance Fee

Finance 095, Set 4 – Flashcards

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