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WorksheetsFP 1 Unit 2 Test Review
Total questions: 50
Worksheet time: 25mins
A marketplace where trading of securities such as equities, bonds, currencies, and derivatives occurs is referred to as a:
call market
bear market
financial market
foreign exchange market
In which financial market do people make investments in cocoa beans and corn?
money
insurance
soft commodities
selective property
A level of performance that describes using the least amount of input to achieve the highest amount of output is known as:
commodity
efficiency
liquidity
market
Which type of financial market sells new stock or bond issues to investors?
primary capital
soft commodities
secondary capital
hard commodities
A type of market in which each transaction takes place at predetermined time intervals is referred to as a:
call market
bond market
financial market
continuous market
A type of market that allows traders to trade any time the market is open is known as a:
call market
bond market
financial market
continuous market
The term that refers to how easily an asset can be converted to cash is known as:
commodity
currency
Eurobond
liquidity
A form of money held or traded outside the country in whose currency its value is stated is known as:
US currency
Eurocurrency
export currency
import currency
This is a guarantee that a check, ATM, wire transfer or debit card transaction will clear if the account balance falls below zero
Bank account
Overdraft Protection
Asset Management
Checking account
Chris wants to open a small business, and he has a very good business plan that is likely to succeed. Where would Chris be most likely to go to apply for a loan?
Local Bank
National Bank
Insurance Company
Mortgage Company
Marcus wants to invest a portion of his money in long-term securities to finance his son's college education and his own retirement. To help him make the best investment decisions, Marcus should obtain the services of a:
Loan officer
Licensed tax accountant
certified financial planner
credit-union representative
Individuals are most likely to require the services of a mortgage company when they want to:
purchase real estate
earn interest on savings
Acquire liability insurance
invest in the stock market
Brian recently got his first part-time job as a food bagger at a local grocery store. He needs a safe place to store his income that allows him to withdraw money easily and frequently. Brian should consider opening which type of account?
savings
checking
health savings
individual retirement
The direction of a client's cash and securities by a financial services company, usually an investment bank, or an individual is known as:
A lockbox
a vendor lease
private placement
asset management
A service that a bank provides to a company for the receipt of customers' payments, which are directed to a special post office box instead of directly to the company, is referred to as a/an:
lockbox
vendor lease
private placement
asset management
Which type of protection ensures that a check, ATM, wire transfer, or debit card transaction will clear if the account balance falls below zero?
asset
liability
overdraft
system
The electronic clearance and settlement system used for financial transactions by U.S. commercial banks and other institutions is called the:
Federal Reserve system (FRS)
Automated clearing house (ACH)
Automated teller machine (ATM0
Federal Deposit Insurance Corporation (FDIC)
The threat to wealth creation is
Compounding
Inflation
Deflation
None of these
In order to create wealth and to manage inflation, one should
Save
Invest
Consume
None of these
Investment in shares creat wealth in long run.
False
True
None of these
Diversification is the advantage of investment through
Shares
Mutual funds
Property
None of these
Comparatively, Mutual funds are riskier than shares.
True
False
None of these
_____ describes how easily an asset can be converted into currency.
Smelliness
Stickiness
Hotness
Liquidity
A ____ is a financial intermediary that accepts deposits, makes loans, and offers checking accounts.
bank
payday lender
federal reserve
brokerage firm
Banks earn _____ on their loans, and with that money they pay _____ to their depositors, cover their own operating costs, and earn a profit. (Same word for both blanks.)
(a)
If a bank does fail, federal ____ insurance will cover up to $250,000 per account.
homeowners'
deposit
life
bank
The entity that insures bank customers up to $250,000 per account is the ____.
CPSC
SEC
FDIC
FTC
Investments include financial risks
True
False
You need to be aware of different financial products available to you
True
False
Which of the following institutions does not belong to the group?
Expanded Comml Banks
Ordinary Comml Banks
Thrift Banks
Pawnshops
Which of the following institutions does not belong to the group?
Private Devt Banks
Savings and Mortgage Banks
Stock Savings and Loan Association
Rural Banks
Investors are influenced by the projected _________ on their capital.
market
return
rate
The Stock Exchange deals with the purchase and sale of ________.
stocks and shares
bulls and bears
statements and invoices
The purpose of the risk pyramid is to show a comparison of:
one stock to another
one investment to another
stocks to stock mutual funds
corporate bonds to municipal bonds
Ownership investments are ideal for investors who are:
risk-averse
risk-tolerant
close to retirement
just beginning to invest
Investors take a risk for the potential of receiving a:
Bonus
prize
promotion
return
Which is an advantage of a money market account over a savings account?
The rate of return on money account is significantly better.
Money market accounts provide corporate ownership rights.
One can often write checks from a money market account.
Money market accounts are insured by the FDIC.
One of the biggest risks to a real estate investment is:
Depreciation
a low rate of return
lacking FDIC insurance
the inability to write checks
Which statement is true about certificates of deposit?
They may depreciate in value
The riskiest investment is a certificate of deposit
one must pay a penalty for withdrawing money early
Certificate of deposit are issued by corporations or governments
Which is an example of a lending investment?
bond
stocks
antiques
real estate
In investing, legal lending or owning agreements between individuals,
businesses, or governments are known as:
bonds
guarantees
securities
treaties
A disadvantage of owning stocks is the:
A high degree of risk
Low potential for return
penalty for early withdrawal
potential for loss of time and effort
Which is an advantage of investing in bonds?
They are very low risk
they are insured by the FDIC
They offer extremely high rate of return.
They permit people to access their money at any time.
With a lending investment, investors:
avoid taking any risk
hire a financial advisor
allow borrowers to use their money for a price
maintain a minimum amount of money in the investment
Which is a disadvantage of investing in a savings account?
The account's potential for loss is high.
The rate of return fails to keep up with inflation
One must pay a penalty for withdrawing money early
A minimum balance is required to keep the account active
Which are often considered one of the safest investments?
commodities
penny stocks
precious metals
government bonds
With an ownership investment, investors:
buy a home to live in.
collect popular items.
invest in multiple corporations.
pay for the right to own something.
Which is a factor that determines how much investment risk a person can handle?
goals
income
social status
banking institution
Which is an example of a real estate investment?
Corporate Bond
Certificate of Deposit
Partial ownership of a Corporation
Land to be developed in the future
Which statement most accurately describes the relationship between risk and return?
For the potential of a low return, an investor usually accepts no risk.
For the potential of a high return, an investor usually accepts a low
risk.
For the potential of a low return, an investor usually accepts a high
risk.
For the potential of a high return, an investor usually accepts a high
risk.
