BF21 Unit 3 Practice Test

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

What does an income statement show about a company over a period of time?

• equity

• liabilities

• profitability

• reliability

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)

Teri decided to invest in a few different mutual funds rather than put all her investment dollars into one or two individual stocks. A stock in one of her mutual funds became worthless, but since her investment was spread out,

Teri was only slightly affected. What advantage of mutual funds

does Teri's situation illustrate?

• Liquidity

• Convenience

• Diversification

• Professional money management

What does the price-earnings (PE) ratio measure?

• Stock price compared to sales.

• Stock price compared to shareholders' equity.

• Management's ability to streamline operations.

• Investors' expectations about a company's performance.

Which is considered reliable bond?

• Callable

• Corporate

• Government

• Putable

When assessing a stock using fundamental analysis , what should an investor consider?

• Qualitative and quantitative factors.

• A chart of the price over the last year.

• Only ratios and other quantitative factors.

• Recent trends that might affect the short-term price.

What is a mutual fund that has no limit on the number of shares it can issue or the amount of money it can hold called?

• stock fund

• growth fund

• open-end fund

• closed-end fund

Why are quantitative measures such as ratios considered helpful?

• They can be used in context.

• They are figured the same way regardless of the source.

• They can be used to compare companies in different industries.

• They show the relationship between numbers on a company's financial statements.

Which statement is false about Form 8-K?

• Companies are required to file it within 15 days of a significant event.

• Companies are required to file it for the first three quarters of the fiscal year.

• The form describes changes in company management, products, acquisitions, or legal actions.

• The form is important because it alerts investors to events that might affect a company's fundamental value.