FIN4504ExamIReview

FIN4504ExamIReview - FIN 4504 Investments Exam I Review...

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FIN 4504 Investments Exam I Review Chapter 1 I. Investments and the Investment Process A. Types of Investments 1. Securities or Property 2. Direct or Indirect 3. Debt, Equity, or Derivative Securities 4. Low or High Risk 5. Short- or Long-Term 6. Domestic or Foreign B. The Structure of the Investment Process 1. Suppliers and Demanders of Funds a. Government b. Business c. Individuals 2. Types of Investors II. Investment Vehicles A. Short-Term Vehicles B. Common Stock C. Fixed-Income Securities 1. Bonds
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2. Preferred Stock III. Making Investment Plans A. Steps in Investing 1. Meeting Investment Prerequisites 2. Establishing Investment Goals 3. Adopting an Investment Plan 4. Evaluating Investment Vehicles 5. Selecting Suitable Investments 6. Constructing a Diversified Portfolio 7. Managing the Portfolio B. Considering Personal Taxes 1. Basic Sources of Taxation 2. Types of Income a. Ordinary Income b. Capital Gains and Losses 3. Investments and Taxes C. Investing Over the Life Cycle D. Investing in Different Economic Environments 1. Stocks and the Business Cycle 2. Bonds and Interest Rates IV. Meeting Liquidity Needs: Investing in Short-Term Securities A. Role of Short-Term Securities 1. Interest on Short-Term Securities 2. Risk Characteristics 3. Advantages and Disadvantages of Short-Term Investments B. Popular Short-Term Investment Vehicles
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Investment Suitability 1)  Which of the following are true concerning institutional investors?  I.  Institutional investors are professionals who manage money for other people.  II.  Banks, insurance companies and mutual funds are all institutional investors.  III.  Institutional investors are very knowledgeable about the financial markets.  IV.  Institutional investors invest large sums of money.  A)  I and II only  B)  I, II and IV only  C)  II, III and IV only  D)  I, II, III and IV  2)  Susie purchased a stock one year ago at a price of $24 a share. In the past year, she has  received four quarterly dividends of $0.50 each. Today she sold the stock for $27 a share. The  amount of capital gain per share is  A)  $2.00.  B)  $3.00.  C)  $4.00.   D)$5.00.   3)  In selecting investments consistent with your goals, you should consider  A)  rates of return and taxes only.  B)  the pre - tax rate of return only.  C)  annual dividends and taxes only.                         D)risks, returns, and taxes.   4)  The primary risk associated with a short - term investment is  A)  purchasing power risk.  B)  default risk.  C)  interest rate risk.  D)  economic risk.  5) The government is generally  A)  not involved in the financial markets.  B)  the owner of the financial market.  C)  a supplier of funds to the financial market.                        D)a demander of funds in the financial market.  
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FIN4504ExamIReview - FIN 4504 Investments Exam I Review...

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