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WorksheetsPersonal Finance: Chapter 12 Review
Total questions: 21
Worksheet time: 11mins
A debenture (general obligation bond) is a corporate bond that has less risk than a mortgage bond.
True
False
The greater the risk of an investment typically yields the potential for a higher return to the investor.
True
False
To pay for a new school, a local government may issue a municipal bond.
True
False
A sinking fund means a bond is losing value.
True
False
Naomi purchased a Kraft Foods bond with an S&P rating of "BBB". Her bond is best described as:
a. a risk-free bond
b. a junk bond
c. an investment-grade bond
d. a speculative bond
A typical corporate bond states all of the following facts about the bond EXCEPT ____.
the amount of interest dollars paid
the interest rate
the maturity date
its face value
A mutual fund investor can gain all of the following types of income EXCEPT:
income dividends
capital gains
semi-annual interest checks
capital gain distributions
Isabella bought a registered zero-coupon bond and discovered that it differs from other bonds because:
provides no regular interest payments and bought at a discount
provides no regular interest payments
anyone in possession of the physical certificate can collect the face value
bought at a discount off of face value
An investor can trade a bond for shares of the corporate stock if the bond is a ____.
mortgage bond
debenture
subordinated debenture
convertible bond
To reach maturity, Treasury bills take between ____.
10 to 30 years
1 to 30 years
1 to 10 years
4 to 52 weeks
A mutual fund that has an unlimited number of shares that can be purchased and sold by investors on an ongoing basis:
aggressive fund
open-end fund
high-yield fund
closed-end fund
When Leilani chooses to invest in a U.S. Government treasury bond vs. a corporate bond, she:
has the same risk as a corporate bond from a blue-chip company
will enjoy higher than average interest payments
is faced with a low risk of losing her investment dollars
is faced with a higher than average risk of losing her investment dollars
When Nina buys into a mutual fund with 1,000 and sells out of it two years later and receives 2,500, she realized:
a. a tax break
b. a capital gain distribution
c. a capital gain
d. an income dividend
A mutual fund in which you pay a commission every time you buy or sell shares.
Load fund
Commission fund
Dividend fund
Obligation fund
When Carlos purchased a Coca Cola bond that matures in 2040 with a 5% interest rate, he is:
lending money to Coca Cola and they promise to pay him back in 2040
buying a piece of ownership in Coca Cola and they will offer to pay him back in 2040
lending money to Coca Cola and he has the option to get repaid in 2040
buying a piece of ownership in Coca Cola and has voting rights until 2040
Which Standard & Poor’s rating designates the riskiest investment of the following?
BB
AA
BBB
AAA
19. Index funds ____________.
are minimally managed
have lower fees
are minimally managed, have lower fees, and follow a market index
follow a market index
20. Maple invested in a large-cap fund. Ben invested in an mid-cap fund. Austin invested in a small-cap fund. Who is faced with the lowest risk investment?
Ben
each of them have equal risk
Maple
Austin
The rate of return earned by an investor who holds a bond for a certain period of time:
bond risk
bond yield
bond rating
bond price
Toran bought the ABC mutual fund on 11/30/19, and Eddie tried buying the same fund last week but there were no more shares available. The ABC fund is best described as:
a. a registered fund
b. a members fund
c. open-end fund
d. closed-end fund
Investors buy mutual funds for all of the following reasons EXCEPT:
FDIC insurance
choices for different risk levels
professional management
diversification
