Unformatted text preview: Self Test
Multiple Choice You can find the answer's on the last page of this book .
16 - 1 Mason recently bought a $10 , 000 government bond
16- 6 Jeremy wants to invest in companies that have a
with a 3.5 percent interest rate . For the first two
long history of consistent growth and stability .
years , his semiannual interest payments were $175 ,
He should invest in which of the following ?
$175, $200 , and $200 . What kind of government
2 . Blue- chip stocks
bond would Mason most likely have purchased ?
b . Growth stocks
2 . Treasury bill
c . Value stocks
b. Treasury note
d. Cyclical stocks
d . Treasury bond
16 - 7 Which of the following describes a security
issued by a local government agency ?
16 - 2 Which of the following could cause a stock price
2 . Acme , Inc . debenture bond
to change for Sunny Orange Growers , Inc . ?"
b . Souderton County Water Authority bond
2 . More investors dislike the stock and sell it than
those who like the stock and buy it .\
C . 10 - year Treasury bond
b. An unexpected freeze ruins the Florida orange
d . Fidelity bond fund
crop for the year .
16 - 8 If you own a $5, 000 bond that has a coupon of
The government establishes a tax incentive for all
4 percent and pays interest semiannually , how
U.S. agricultural companies that will help boost net
much interest would you receive ?"
2 . $200 every six months
d . All of the above .
b . $200 once a year
16 - 3 What document must companies prepare and
c . $200 every two years
make available to investors when issuing stocks
d . $100 twice a year
for the first time ?
2 . A prospectus
16 - 9 Which is not an advantage of investing in
mutual funds ?"
b . An initial public offering
2 . Mutual funds have less price variability than
C. Proprietary underwriting
stocks or bonds .
d . Investor guideline sheets
b . Mutual funds provide diversification .
16 - 4 Tracy Quinn feels she has a great investment
C . Mutual fund investments are managed by a profes -
portfolio . She has investments in technology
stocks , banking stocks , and consumer goods
d . None of the above .
stocks . Which type of investment should she use
if she is striving for greater asset allocation ?"
16 - 10 An ETF is
2 . Foreign stock mutual fund
2 . a contract that gives a buyer the right to buy or sell
b . S& P Index fund
a security at a specified price on or before a certain
c . Municipal bond fund
d . Any of the above
b . an agreement between a buyer and seller to buy an
asset at a later date at a specified time .
16- 5 Jose Fernandez is saving toward retirement and
C . an investment fund that is valued by its net asset
has an investment portfolio that reflects his
value at the end of a trading day .
risk tolerance . It was carefully put together by
a trusted investment adviser . Unfortunately ,
d . an investment that holds a collection of invest -
the returns on the portfolio are not projected to
ments and trades like a stock .
generate the type of savings Jose desires . What
should Jose do ?
a . Invest in riskier stocks that have a higher return .
b . Lower his retirement expectations .
C . Increase his risk tolerance .
d . Change investment advisers ....
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- Fall '08