WorksheetsInvestment and Risk Assessment
Total questions: 22
Worksheet time: 11mins
An investor concerned with a predictable source of income provided by an investment would choose:
U.S. government securities.
commodities.
options.
common stocks.
speculative investments.
Based on historical performance, which one of the following investments is most likely to provide an average return of 10 percent a year between now and the year 2035?
U.S. Treasury bills
Corporate bonds
Stocks
Options
Zero-coupon bonds
An investor purchased a stock they expect will provide them with a quarterly cash payment, although that payment is not guaranteed and can vary over time. What type of payment are they expecting to receive?
Interest
Capital gain
Dividend
Tax rebate
Option premium
Which one of these is not an example of systematic risk?
War
Inflation
Political activity
Decline in the auto industry
Increasing interest rates
Which of the following is not true of mutual funds?
Mutual funds range from very conservative to extremely speculative investments.
They do not offer diversification.
They can be used for retirement accounts.
This investment may provide professional management.
A mutual fund pools the money from many investors.
Many financial planners recommend that you choose a mutual fund with an expense ratio of:
1 percent or less
2 percent or less
3 percent or less
4 percent or less
5 percent or less
The current market value of a mutual fund’s portfolio minus the mutual fund’s liabilities equals a figure, that when divided by the number of shares outstanding, results in the
book value
outstanding balance
expense ratio
accounting value
net asset value
Kay Powers wants to diversify her portfolio by investing in a firm that has the potential to earn above average profits compared to other firms in the economy. What type of stock is Kay thinking about adding to her portfolio?
Defensive stock
Cyclical stock
Small cap stock
Blue chip stock
Growth stock
Assume that you purchased 100 shares of a stock for 50ashare,thatyoureceivedanannualdividendof 2.50 a share, and that you sold your stock for $60 a share at the end of one year. What is the total return on your investment?
$200
$1,000
$1,250
$1,500
$2,200
The stock exchange known to trade stock for innovative, forward-looking growth companies is the:
A) NYSE.
B) NASDAQ.
C) American Stock exchange.
D) S&P 100.
E) STSE.
Earnings per share for a stock investment is calculated as:
after-tax income divided by the number of stockholders.
the number of stockholders divided by after-tax income.
after-tax income divided by the number of shares outstanding.
the number of shares outstanding divided by after-tax income.
None of these
The dividend yield for a stock investment is calculated by dividing:
the annual dividend amount per share by the investment’s past price per share.
the annual dividend amount per share by the investment’s current price per share.
the annual dividend amount per share by the investment’s future price per share.
the investment’s past price per share by the annual dividend amount per share.
the investment’s current price per share by the annual dividend amount per share.
If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally:
increase in value.
decrease in value.
remain unchanged.
become worthless.
be returned to the corporation.
A corporate bond rated B by Moody's would be suitable for:
every investor.
very cautious investors.
speculators.
no one because the bond issue is in default.
investors who are highly dependent upon the interest income.
Together, all the different management fees, 12b-1 fees, and additional operating costs for a specific fund are referred to as a(n):
investment ratio.
expense ratio.
financial ratio.
expense turnover.
management ratio.
A mutual fund that invests in stocks issued by companies with a long history of paying dividends is called a(n) (a) fund.
balanced
equity income
industry
money market
A mutual fund that invests in stocks and bonds with the primary objectives of conserving principal, providing income, and long-term growth is called a(n) (a) fund.
balanced
growth
industry
money market
Joseph Carter is buying shares in a mutual fund that is investing in stocks throughout the world, including the United States. What type of mutual fund is this?
Aggressive-growth fund
Equity income fund
Global stock fund
International fund
Regional fund
Sloan Richards is buying shares in a mutual fund that invests in companies with a total capitalization of less than $2 billion. What type of mutual fund is this?
Socially responsible fund
Sector fund
Small cap fund
Index fund
Growth fund
Nathan Fuller is buying shares in a mutual fund that invests in the exact same companies as those found in the Standard & Poor’s 500. What type of mutual fund is he buying?
Socially responsible fund
Sector fund
Small cap fund
Index fund
Growth fund
A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called:
a dividend reinvestment plan.
a buy and hold strategy.
regulated transaction.
dollar cost averaging.
secured transactions.
Which of the following is not true of index funds?
Sometimes they are called "passive" funds.
They do have managers that simply buy the securities in the index.
They are a low-cost alternative to managed mutual funds.
The S&P 500 index outperforms the majority of funds over many years.
The typical expense ratio for index funds is 0.50 percent or more.
