Financial Planning I Unit 3

Which item should be placed in the liabilities section on a company balance sheet?

• cash
• buildings
• inventory
• employee wages

Which individual does in-depth work on formulating investment strategies for clients, helping them fulfill their needs, and reaching their financial goals?

• financial planner
• investment banker
• financial consultant
• mutual fund manager

Which person will analyze, interpret, and process a wide variety of transactions, and be aware of their impact to assets on behalf of a beneficiary?

• financial planner
• investment banker
• trust operations specialist
• securities operations specialist

Which is an important business factor to consider when choosing an investment?

• time horizon
• risk tolerance
• minimization of taxes
• comparison to competition

Which is an appropriate investment objective for a mutual fund with a buy-and-hold approach?

• covering a broad range of industries
• seeking long-term capital appreciation
• investing primarily in a diversified portfolio
• investing in stocks with superior growth potential

Which best describes a marketable bond?

• one that is bought and sold in the open market
• one that later becomes a stock at a market
• one that comes from a governing body
• one that is paid back before maturity

Which type of stock comes with voting rights?

• income
• common  
• preferred  
• small cap

Too much diversification in a financial portfolio can:

• dilute the value of big gains on an individual stock.
• cause other investors to avoid a particular stock.
• keep stock fund managers from doing their jobs.
• prevent a stock from growing in value.

An individual who often works as part of a financial institution and is primarily concerned with raising capital for corporations, governments, or other entities is called a/an:

• market consultant.
• investment banker.
• mutual fund manager.
• securities sales agent (broker).

Which is a poor way to find companies in which to invest?

• Read reputable investment magazines and newspapers.
• Discuss investment opportunities with family and friends.
• Follow suggestions in unsolicited e-mails and phone calls.
• Investigate businesses that have interesting products and services.