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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 C. TIPS 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 ?" income . 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 sional . 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 date . 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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