Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The single most important reason for investing is for [a down payment on a home | a down payment on an automobile | retirement].

Accepted Answer

Neither "a down payment on a home" nor "a down payment on an automobile" is the single most important reason for investing. The most important reason for investing is often considered to be saving for retirement.

Question 2

Monte wants to save for his daughter's college education.He would like to have $85,000 in 15 years.If Monte can earn an average of 8.5% on this fund,how much would he need to deposit in the account today to meet his goal?
If Monte has no money to set aside now but wants to save at the end of each month for this goal,how much would he need to add to the account each month?

Accepted Answer

The answer of Monte wants to save for his daughter's...

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Retired people often choose investments offering [high current income | low current income].

Accepted Answer

Retired people often prioritize income over growth, therefore they would choose investments offering high current income.

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Diversification should [reduce the possibility of losing all your money | have little impact on the risk of losing money].

Accepted Answer

Diversification is a technique used to spread out investment risks by investing in a variety of different assets. By doing so, the possibility of losing all your money is reduced because any losses in some investments may be offset by gains in others.

Question 5

You have just bought 100 shares of ABC Corporation common stock at 70.50.The commission is calculated as 1.5% of the total value of the transaction plus $30.What commission will you be charged and how much must you pay the broker for the entire transaction?

Accepted Answer

The answer of You have just bought 100 shares of...

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-In terms of market capitalization,[Apple | IBM] is the biggest company in the world.

Accepted Answer

Apple is the biggest company in the world in terms of market capitalization.

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Investments with high current income typically have [high | low] potential capital appreciation.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Asset allocation is another term for [selecting the stocks you want to buy | deciding what percentage of your investment you want in stocks].

Accepted Answer

Asset allocation refers to the process of deciding how much of your investment you want to allocate to different asset classes such as stocks, bonds, cash, and alternative investments. It is not the same as selecting individual stocks.

Question 9

You have inherited $250,000.You have decided that since you don't need the money currently,you should invest for the long-term.After seeking advice,you decide on an asset allocation plan that puts 10% in short-term securities,75% in equities,and 15% in bond funds.How much money would you put in each category?

Accepted Answer

The answer of You have inherited $250,000.You have decided that...

Question 10

Abe owns 1000 shares of Amazon,which he purchased for $12 per share 3 months ago.Abe just checked the price of Amazon and found that it is selling for $19 per share.He is so excited about his gain that he has booked a $6,000 20-day trip to Hawaii for he and his wife.He wants to be sure that the trip will be paid for entirely from gains in his Amazon shares because his wife has been nagging him about his frequent stock trading habit and he feels that this trip will demonstrate to her once and for all that he has the skills,acumen and instincts to get rich trading stocks.He feels strongly that the price of Amazon stock will go through the roof in the intermediate term but is concerned about short-term volatility.Abe's plan is to sell the shares only if the value of his shares either declines below $18,000 or if the value climbs to $30,000.He would like to submit his stock orders right now,because for the next three weeks it is very important to his marriage that he not trade or even follow the market (maybe just a peek at CNBC while his wife is in the shower).Which of the following set of stock orders would accomplish his pathetic goals?

Accepted Answer

The answer of Abe owns 1000 shares of Amazon,which he...

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The single most important reason for investing is for [home purchase down payment | retirement].

Accepted Answer

The statement is discussing long-term savings and the need to save for retirement, which is a common reason for investing. While saving for a home purchase down payment can also be a reason for investing, the statement specifies that the single most important reason is being asked for.

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The axiom that explains diversification is [Don't cry over spilt milk | Don't put all of your eggs in one basket].

Accepted Answer

The phrase "Don't put all of your eggs in one basket" is the commonly used axiom to explain diversification, as it suggests that it is risky to rely on a single investment or venture.

Question 13

You have just bought (on margin)100 shares of IBM Corp.common stock for $108 per share.One year from now you expect to sell the stock for $140.The interest charge will be 9%.What return do you expect to earn on your investment? (Show all work.Ignore commissions.)

Accepted Answer

The answer of You have just bought (on margin)100 shares...

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Exchange traded funds face the risk of [market fluctuations | default].

Accepted Answer

Exchange traded funds are subject to market fluctuations because they track indexes or baskets of securities, which are subject to changes in market conditions. Default risk is not a major concern for ETFs, as they typically hold a diversified portfolio of securities and are not reliant on a single issuer.

Question 15

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 included provisions to improve [accountability | sustainability].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-NYSE Euronext is a part of the broker market totaling about [40% | 80%] of world equity markets.

Accepted Answer

NYSE Euronext is one of the largest stock exchanges in the world, but it does not make up the majority of world equity markets. The correct estimation is that it represents about 40% of the broker market. Therefore, the correct choice is 40%.

Quiz 11: Investment Planning

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The single most important reason for investing is for [a down payment on a home | a down payment on an automobile | retirement].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Retired people often choose investments offering [high current income | low current income].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Diversification should [reduce the possibility of losing all your money | have little impact on the risk of losing money].

You have just bought 100 shares of ABC Corporation common stock at 70.50.The commission is calculated as 1.5% of the total value of the transaction plus $30.What commission will you be charged and how much must you pay the broker for the entire transaction?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -In terms of market capitalization,[Apple | IBM] is the biggest company in the world.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Investments with high current income typically have [high | low] potential capital appreciation.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Asset allocation is another term for [selecting the stocks you want to buy | deciding what percentage of your investment you want in stocks].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The single most important reason for investing is for [home purchase down payment | retirement].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The axiom that explains diversification is [Don't cry over spilt milk | Don't put all of your eggs in one basket].

You have just bought (on margin)100 shares of IBM Corp.common stock for $108 per share.One year from now you expect to sell the stock for $140.The interest charge will be 9%.What return do you expect to earn on your investment? (Show all work.Ignore commissions.)

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Exchange traded funds face the risk of [market fluctuations | default].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 included provisions to improve [accountability | sustainability].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -NYSE Euronext is a part of the broker market totaling about [40% | 80%] of world equity markets.