Question 1

Yolanda has an ownership interest in many different companies,yet she owns the shares of stock of just one organization.Yolanda undoubtedly owns shares in a(n):

Accepted Answer

Yolanda owns shares in a mutual fund, which pools money from many investors to purchase a diversified portfolio of stocks and bonds, allowing her to have an ownership interest in multiple companies through a single investment.

Question 2

Gerald,a recent graduate of a community college,is about to make his first investment in the stock market.Which of the following would be a cautious way for Gerald to start investing?

Accepted Answer

Index funds are a cautious way to start investing because they are a diversified investment in a basket of stocks, which helps to reduce risk. Future contracts, short-selling, and commodity market transactions are all higher-risk investments that should be approached with caution and experience.

Question 3

Mutual fund investors will note that:

Accepted Answer

Loads, or commissions and fees, can vary significantly from one mutual fund to another and are dictated by the fund manager. This is an important consideration for investors when evaluating different mutual fund options. Options A and B are incorrect as there are many mutual funds that include foreign securities and they can be purchased through traditional brokerage houses. Option D is incorrect as there are still mutual funds that charge loads, although there has been a shift towards no-load funds in recent years.

Question 4

________ represent the best way for investors to have their investments managed by a trained specialist for a fee.

Accepted Answer

Mutual funds are professionally managed investment portfolios that pool money from many investors to purchase a diversified mix of stocks, bonds, and other securities. They are a great way for investors to have their investments managed by trained specialists. The fee for this service is typically lower than hiring an individual financial advisor, making mutual funds an affordable option for many investors. Individual stocks, corporate bonds, and government bonds do not offer the same level of professional management as mutual funds.

Question 5

Which of the following describes a mutual fund that charges no commission to buy or sell its shares?

Accepted Answer

A no-load fund is a mutual fund that does not charge a commission or sales fee to buy or sell its shares. This can make it a more cost-effective choice for investors compared to front-load funds, which charge a commission upfront, or closed-end funds which may have higher fees due to their structure. Open-end funds may or may not charge a commission, depending on their specific rules and fees.

Question 6

During Ben's lunch break,he logged on to his computer to find the mutual fund he wanted to buy.As he made his way around several websites,he realized that the NAV (net asset value)quoted was yesterday's close.His shares would be purchased tomorrow,with today's closing price.Looking over his shoulder,one of his coworkers suggested that he look into _________ because they are similar to mutual funds,but could be traded during the entire trading day,just like stocks.

Accepted Answer

Exchange traded funds (ETFs) are similar to mutual funds in that they hold a basket of investments, but they can be traded throughout the day like stocks. This means that the NAV quoted for an ETF is usually up-to-date, providing a more accurate reflection of the fund's value.

Question 7

When reading mutual fund quotations,the ________ is the price per share.

Accepted Answer

The answer of When reading mutual fund quotations,the ________ is...

Question 8

Applying what you have learned about investments introduced to you in Chapter 19,put the following investments in order from riskiest to least risky.Which of following lists begin with the least risky investment and ends with the most risky? Least risky = 1;most risky = 5

Accepted Answer

The answer of Applying what you have learned about investments...

Question 9

As indicated in the Thinking Green box in Chapter 19,investors interested in sustainability and the betterment of the natural environment,and the concept of "going green",can invest in:

Accepted Answer

SRIs (Socially Responsible Investment Funds) are the best choice for investors interested in sustainability and the betterment of the natural environment as they primarily focus on investing in companies that adhere to socially responsible environmental practices. They assess the environmental impact of a company's practices, and only invest in companies that promote sustainable practices and have minimal environmental impact.

Question 10

_____________ have a set dollar goal the fund manager wants to manage.Once the fund has reached that goal,it does not accept new investors.

Accepted Answer

Closed-end funds have a set dollar goal the fund manager wants to manage. Once the fund has reached that goal, it does not accept new investors. No load funds do not have sales charges, while Drop-off funds and Zero Sum load are not types of funds.

Question 11

To reduce the risk of investing in an individual stock,an ownership position in many different companies can be achieved by purchasing shares in a(n):

Accepted Answer

A mutual fund invests in a diversified portfolio of stocks, allowing the investor to reduce the risk of investing in individual stocks. Indexed securities, diversification bonds, and stock cooperatives do not necessarily provide diversification, and may still carry a high level of risk.

Question 12

__________ are collections of stocks that are traded on exchanges but are traded more like individual stocks than like mutual funds.

Accepted Answer

ETFs (Exchange Traded Funds) are collections of stocks that are traded on exchanges but are traded more like individual stocks than mutual funds. REITs (Real Estate Investment Trusts) are a type of security that invests in real estate, LOCs (Lines of Credit) are a type of loan, and SRTs is not a commonly used financial term.

Question 13

A mutual fund company buys securities from corporations and governments,and packages them together into a "mutual fund".It then ________________.

Accepted Answer

The mutual fund company sells shares of the packaged investment to interested investors.

Question 14

The initial cost of investing in mutual funds depends in part on:

Accepted Answer

The initial cost of investing in mutual funds depends on whether the fund is a load or no-load. Load funds charge a sales commission, which can range from around 3-6% of the investment amount. No-load funds, however, do not charge a sales commission and therefore have no initial cost aside from the actual investment. The other options listed (B, C, and D) do not impact the initial cost of investing in mutual funds.

Question 15

Which of the following describes a benefit enjoyed by investors in mutual funds?

Accepted Answer

Investors in mutual funds are able to buy an ownership interest in many different companies, which allows for diversification and reduces investment risk. Mutual funds are typically managed by professional portfolio managers who make investment decisions on behalf of the investors. Dividend payments are not guaranteed and the investors do not exercise managerial authority in the companies held by the mutual fund.

Question 16

Buying several different investment alternatives to spread the risk helps an investor achieve:

Accepted Answer

Diversification helps an investor spread the risk of loss across different investment alternatives, thereby decreasing the impact of any one particular investment on their overall portfolio. This can help improve the investor's overall return and reduce the potential negative effects of any single investment decision.

Question 17

An investment that pools together investors' money in order to buy securities in many different companies or governments is a ___________.

Accepted Answer

A mutual fund is an investment vehicle that pools together money from multiple investors to purchase a diversified portfolio of securities, such as stocks, bonds or real estate. It's managed by professional fund managers who invest the money on behalf of the investors in accordance with the fund's investment objective. Commercial funds and holding companies are other types of investment vehicles but do not fit the description provided in the question. The Public Investment Corporation is a specific entity in South Africa that manages public funds, but it is not a generic term for this type of investment.

Question 18

Previous Close.Which of these will provide her with an indication of the present price per share she can expect to realize if she calls her broker tomorrow morning and asks her to sell the shares?

Accepted Answer

The answer of Previous Close.Which of these will provide her...

Question 19

New investors may want to consider _______ funds,which are mutual funds that invest in one particular kind of stock or a particular kind of bond,or even stocks that are representative of the entire market.

Accepted Answer

Investing in index funds can be a good choice for new investors because they offer diversification by investing in a broad range of stocks or bonds that are representative of the market. This can help minimize risk and provide long-term growth potential.

Question 20

____________ means that the mutual fund company does not show a fee or commission for investing in the fund.

Accepted Answer

No load means that the mutual fund company does not charge a fee or commission for investing in the fund. All of the other options (front load, back load, and double load) indicate that there is a fee or commission either at the time of purchase, sale, or both.

Quiz 19: Using Securities Markets for Financing and Investing Opportunities

Yolanda has an ownership interest in many different companies,yet she owns the shares of stock of just one organization.Yolanda undoubtedly owns shares in a(n) :