Question 1

Which of the following is not a true statement?

Accepted Answer

A)   It is estimated that there are over 100 million Internet users worldwide.
B)   There is a wealth of investment information available, but most small investors cannot afford to use it.
C)   You can obtain current price information for stocks, bonds, and mutual funds by using the Internet.
D)   A search engine is a research tool that helps you move through a menu system until you find the information you want.
E)   Both government and businesses provide individuals with investment information.F) D) and E)
G) C) and E)

Question 2

The belief that something must be of superior value because we own it, is known as the endowment effect.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following investments would rank the highest with regard to safety?

Accepted Answer

A)   real estate
B)   common stock
C)   preferred stock
D)   corporate bonds
E)   bank accountsF) A) and E)
G) A) and B)

Question 4

The amount put aside as an emergency fund should be equal to 3 to 9 months of living expenses.

Accepted Answer

A) True 
 B)False

Question 5

The dollar value of a fixed-return investment decreases when overall interest rates in the economy decreases.

Accepted Answer

A) True 
 B)False

Question 6

Chi Min-Ho is 24 and has saved enough money to fund an adequate emergency fund. In addition, he has saved $5,600 that can be used to fund an investment program. He is single, has no dependents, and would like to retire when he is 60. Which of the investment factors listed below would be most important for an investor like Mr. Min-Ho?

Accepted Answer

A)   beta
B)   income
C)   growth
D)   risk
E)   liquidityF) A) and B)
G) A) and C)

Question 7

An emergency fund should

Accepted Answer

A)   be able to cover 1 month of living expense.
B)   begin after you invest in the stock market.
C)   consist of mutual funds primarily
D)   be able to cover a minimum of 3 months of living expense
E)   not be required if you have unused credit card debt.F) A) and B)
G) A) and E)

Question 8

Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.

Accepted Answer

A) True 
 B)False

Question 9

All except which one of the following are good ways to acquire money for starting an investment program?

Accepted Answer

A)   Pay bills first, and then save a reasonable amount of money for investment.
B)   Participate in an elective savings program offered by your employer.
C)   Make a special savings effort one month per year.
D)   Borrow money specifically for investment purposes.
E)   Take advantage of gifts, inheritances, and windfalls.F) A) and C)
G) All of the above

Question 10

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Accepted Answer

A) True 
 B)False

Question 11

Capital gains and capital losses

Accepted Answer

A)   are not fully taxed.
B)   are subject to higher taxes than is income.
C)   are assets held for longer than two years.
D)   are assets held for longer than five years.
E)   are assets held for longer than ten years.F) D) and E)
G) None of the above

Question 12

Dividends and interest income are taxed as long-term capital gains under the current tax laws.

Accepted Answer

A) True 
 B)False

Question 13

You're down $500 in a poker game. How much more would a conservative investor be willing to put up to win the $500 back?

Accepted Answer

A)   More than $500.
B)   $500.
C)   $250.
D)   $100.
E)   Nothing-cut your losses nowF) B) and E)
G) B) and D)

Question 14

Desktop information services provide instantaneous access to real-time historical financial data, news and many other services.

Accepted Answer

A) True 
 B)False

Question 15

An elective savings program is when an individual cuts back on spending for one to two months to obtain additional money for investment purposes.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following would not be considered a safe investment for a conservative investor?

Accepted Answer

A)   corporate bonds
B)   guaranteed investment certificates
C)   passbook savings accounts
D)   blue-chip stocks
E)   collectiblesF) B) and E)
G) C) and E)

Question 17

Potential investors should wait until they put their financial affairs in order before starting to invest.

Accepted Answer

A) True 
 B)False

Question 18

Common stock represents the most basic form of corporate ownership.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following is not a true statement?

Accepted Answer

A)   Most mutual funds invest in stocks, bonds, and other securities.
B)   Diversification provided by a mutual fund reduces risk.
C)   The goals of one mutual fund investor may differ from those of another.
D)   Since mutual fund managers are professionals, there is no need to evaluate a mutual fund.
E)   Mutual fund investments range from very conservative to very speculative investments.F) D) and E)
G) B) and C)

Question 20

Studies show that investors are willing to run a greater risk to avoid a loss than to make a gain. In behavioural finance this is called loss aversion.

Accepted Answer

A) True 
 B)False

Exam 10: Fundamentals of Investing

Which of the following investments would rank the highest with regard to safety?

Correct Answer
verified

Capital gains and capital losses

Correct Answer
verified

Common stock represents the most basic form of corporate ownership.

Correct Answer
verified

Which one of the following is not a true statement?

Correct Answer
verified

All except which one of the following are good ways to acquire money for starting an investment program?

Correct Answer
verified

Which of the following is not a true statement?

Correct Answer
verified

Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.

Correct Answer
verified

Correct Answer
verified

Desktop information services provide instantaneous access to real-time historical financial data, news and many other services.

Correct Answer
verified

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Correct Answer
verified

The amount put aside as an emergency fund should be equal to 3 to 9 months of living expenses.

Correct Answer
verified

An emergency fund should

Correct Answer
verified

Which of the following would not be considered a safe investment for a conservative investor?

Correct Answer
verified

You're down $500 in a poker game. How much more would a conservative investor be willing to put up to win the $500 back?

Correct Answer
verified

Dividends and interest income are taxed as long-term capital gains under the current tax laws.

Correct Answer
verified

Potential investors should wait until they put their financial affairs in order before starting to invest.

Correct Answer
verified

An elective savings program is when an individual cuts back on spending for one to two months to obtain additional money for investment purposes.

Correct Answer
verified

The dollar value of a fixed-return investment decreases when overall interest rates in the economy decreases.

Correct Answer
verified

Studies show that investors are willing to run a greater risk to avoid a loss than to make a gain. In behavioural finance this is called loss aversion.

Correct Answer
verified

The belief that something must be of superior value because we own it, is known as the endowment effect.

Correct Answer
verified

Exam 10: Fundamentals of Investing

Which of the following investments would rank the highest with regard to safety?

Correct AnswerverifiedShow Answer

Capital gains and capital losses

Correct AnswerverifiedShow Answer

Common stock represents the most basic form of corporate ownership.

Correct AnswerverifiedShow Answer

Which one of the following is not a true statement?

Correct AnswerverifiedShow Answer

All except which one of the following are good ways to acquire money for starting an investment program?

Correct AnswerverifiedShow Answer

Which of the following is not a true statement?

Correct AnswerverifiedShow Answer

Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Desktop information services provide instantaneous access to real-time historical financial data, news and many other services.

Correct AnswerverifiedShow Answer

The decision to establish an investment plan is an important first step to accomplishing your financial goals.

Correct AnswerverifiedShow Answer

The amount put aside as an emergency fund should be equal to 3 to 9 months of living expenses.

Correct AnswerverifiedShow Answer

An emergency fund should

Correct AnswerverifiedShow Answer

Which of the following would not be considered a safe investment for a conservative investor?

Correct AnswerverifiedShow Answer

You're down $500 in a poker game. How much more would a conservative investor be willing to put up to win the $500 back?

Correct AnswerverifiedShow Answer

Dividends and interest income are taxed as long-term capital gains under the current tax laws.

Correct AnswerverifiedShow Answer

Potential investors should wait until they put their financial affairs in order before starting to invest.

Correct AnswerverifiedShow Answer

An elective savings program is when an individual cuts back on spending for one to two months to obtain additional money for investment purposes.

Correct AnswerverifiedShow Answer

The dollar value of a fixed-return investment decreases when overall interest rates in the economy decreases.

Correct AnswerverifiedShow Answer

Studies show that investors are willing to run a greater risk to avoid a loss than to make a gain. In behavioural finance this is called loss aversion.

Correct AnswerverifiedShow Answer

The belief that something must be of superior value because we own it, is known as the endowment effect.

Correct AnswerverifiedShow Answer

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