Question 1
The over-the-counter (OTC) securities market is a/ an
physical location used by companies to buy back securities from the public.
physical location for trading securities through securities dealers.
electronic securities market where securities are bought and sold.
electronic network used by corporations to sell securities to the general public.
Question 2
A common shareholder's claim on a company's assets is residual, meaning the shareholder has a right to share in the assets and income of the corporation only after higher priority claims from ________ are satisfied.
all the stakeholders
bond holders
preferred shareholders
creditors
Question 3
A company with market capitalization of $1.5 billion is considered a
mid-cap company.
large-cap company.
micro-cap company.
small-cap company.
Question 4
Bonds that are rated BBB or better by Standard & Poor's are referred to as
risk-free bonds.
junk bonds.
recession-proof bonds.
investment-grade bonds.
Question 5
A measure of market or non-diversifiable risk is the
coefficient of variation.
variation.
beta.
standard deviation.
Question 6
Which of the following is a disadvantage of common stock ownership?
No management control
Low interest-rate sensitivity
High potential long-run returns
Liquidity
Question 7
Investors that buy bonds often do so because bonds
have a higher return potential than stocks.
provide a predictable income stream.
are higher risk than stocks.
are risk-free.
Question 8
Which of the following two stocks is least risky, assuming it is held in a diversified portfolio? Use the information below.
See-Saw incorporate SloMo Corporation
Beta 2.2 0.75
1-year return 2% 12%
5-year return 25% 8%
See-Saw Incorporated
There is insufficient information to determine the risk.
SloMo Corporation
They are equally risky.
Question 9
Large-cap companies have market capitalization greater than or equal to
$1 billion.
$5 billion.
$100 million.
$10 million.
Question 10
What is the primary reason investors are attracted to preferred stock?
steady dividend stream
low business risk
noncumulative dividends
callability
Question 11
What feature of preferred stock allows shareholders to change their preferred stock into common stock?
convertibility
portability
callability
par value
Question 12
Which of the following types of bonds has the lowest liquidity risk?
treasury bonds
corporate bonds
municipal bonds
All the options have equal liquidity risk
Question 13
Which statement is false regarding closed-end funds?
Closed-end funds always trade at their net asset value.
There are far fewer closed-end funds than there are open-end funds.
Closed-end funds have a fixed number of shares.
Closed-end funds may trade on organized exchanges or in the over-the-counter market.
Question 14
A mutual fund that does not charge either a front-end or back-end load:
is a no-load fund.
is a unit fund.
does not charge an annual management fee either.
always has a higher return than a load fund.
Question 15
Which fund classification would a focus on only stocks of Chinese companies match?
Growth fund
Income fund
Balanced fund
International fund
Question 16
A closed-end fund is an investment company that
sells a variable number of shares based on public demand and buys them back on demand.
issues a fixed number of shares that are bought back by the company.
sells a variable number of shares that are traded in the secondary market.
issues a fixed number of shares that trade on a stock exchange or in the over-the-counter market.
Question 17
Which fund classification would a focus on capital appreciation match?
Growth fund
Income fund
Balanced fund
Global fund
Question 18
A(n) ________ contract is a contract in which you promise to buy or sell the underlying asset at a point in the future for a price determined today.
futures
forward
treasury
annuities
Question 19
The net asset value of a mutual fund that is worth $100 million, has liabilities of $5 million, and has 5 million shares is
$100 million
$95 million
$19 per share
$1 per share
Question 20
When planning for mutual fund costs, a common concept is the fund's ________ ratio, measured by the expenses per dollar of assets under management.
expense
fund
liquidity
dollar
Question 21
Which statement is false regarding exchange-traded funds?
Many exchange-traded funds are designed to be index funds.
Exchange-traded funds are examples of closed-end funds.
Share prices on an exchange-traded fund are determined by market forces.
All of the choices are true.
Question 22
Pug Marbury is looking at some indirect investment choices and notices one of them acts a lot like a mutual fund. Which of the following choices has he likely come across?
real estate investment trust
mortgage-backed security
limited partnership
commercial property
Question 23
Which is a characteristic of an exchange-traded fund (ETF)?
Shares are traded in the secondary market like shares in a closed-end fund.
Shares trade at the net asset value like shares in an open-end fund.
The number of shares outstanding is fixed as in a closed-end fund.
The shares are invested only in common stock of publicly traded corporations.
Question 24
Most open-end mutual funds charge a front-end load, which is
a sales charge or commission paid by investors each year that they own shares in the fund.
a brokerage fee that is paid to a broker for selling mutual funds in the secondary market for an investor.
the annual expenses on the fund divided by the net asset value.
a sales charge or commission paid by an investor when purchasing shares in a mutual fund.
Question 25
Fees paid by mutual fund shareholders include all the following EXCEPT a(n)
10% fee on excess returns.
one-time sales charge assessed at the time of purchase.
annual account maintenance fee.
exchange fee when the investor transfers money from one fund to another.
The over-the-counter (OTC) securities market is a/ an
physical location used by companies to buy back securities from the public.
physical location for trading securities through securities dealers.
electronic securities market where securities are bought and sold.
electronic network used by corporations to sell securities to the general public.
Question 2
A common shareholder's claim on a company's assets is residual, meaning the shareholder has a right to share in the assets and income of the corporation only after higher priority claims from ________ are satisfied.
all the stakeholders
bond holders
preferred shareholders
creditors
Question 3
A company with market capitalization of $1.5 billion is considered a
mid-cap company.
large-cap company.
micro-cap company.
small-cap company.
Question 4
Bonds that are rated BBB or better by Standard & Poor's are referred to as
risk-free bonds.
junk bonds.
recession-proof bonds.
investment-grade bonds.
Question 5
A measure of market or non-diversifiable risk is the
coefficient of variation.
variation.
beta.
standard deviation.
Question 6
Which of the following is a disadvantage of common stock ownership?
No management control
Low interest-rate sensitivity
High potential long-run returns
Liquidity
Question 7
Investors that buy bonds often do so because bonds
have a higher return potential than stocks.
provide a predictable income stream.
are higher risk than stocks.
are risk-free.
Question 8
Which of the following two stocks is least risky, assuming it is held in a diversified portfolio? Use the information below.
See-Saw incorporate SloMo Corporation
Beta 2.2 0.75
1-year return 2% 12%
5-year return 25% 8%
See-Saw Incorporated
There is insufficient information to determine the risk.
SloMo Corporation
They are equally risky.
Question 9
Large-cap companies have market capitalization greater than or equal to
$1 billion.
$5 billion.
$100 million.
$10 million.
Question 10
What is the primary reason investors are attracted to preferred stock?
steady dividend stream
low business risk
noncumulative dividends
callability
Question 11
What feature of preferred stock allows shareholders to change their preferred stock into common stock?
convertibility
portability
callability
par value
Question 12
Which of the following types of bonds has the lowest liquidity risk?
treasury bonds
corporate bonds
municipal bonds
All the options have equal liquidity risk
Question 13
Which statement is false regarding closed-end funds?
Closed-end funds always trade at their net asset value.
There are far fewer closed-end funds than there are open-end funds.
Closed-end funds have a fixed number of shares.
Closed-end funds may trade on organized exchanges or in the over-the-counter market.
Question 14
A mutual fund that does not charge either a front-end or back-end load:
is a no-load fund.
is a unit fund.
does not charge an annual management fee either.
always has a higher return than a load fund.
Question 15
Which fund classification would a focus on only stocks of Chinese companies match?
Growth fund
Income fund
Balanced fund
International fund
Question 16
A closed-end fund is an investment company that
sells a variable number of shares based on public demand and buys them back on demand.
issues a fixed number of shares that are bought back by the company.
sells a variable number of shares that are traded in the secondary market.
issues a fixed number of shares that trade on a stock exchange or in the over-the-counter market.
Question 17
Which fund classification would a focus on capital appreciation match?
Growth fund
Income fund
Balanced fund
Global fund
Question 18
A(n) ________ contract is a contract in which you promise to buy or sell the underlying asset at a point in the future for a price determined today.
futures
forward
treasury
annuities
Question 19
The net asset value of a mutual fund that is worth $100 million, has liabilities of $5 million, and has 5 million shares is
$100 million
$95 million
$19 per share
$1 per share
Question 20
When planning for mutual fund costs, a common concept is the fund's ________ ratio, measured by the expenses per dollar of assets under management.
expense
fund
liquidity
dollar
Question 21
Which statement is false regarding exchange-traded funds?
Many exchange-traded funds are designed to be index funds.
Exchange-traded funds are examples of closed-end funds.
Share prices on an exchange-traded fund are determined by market forces.
All of the choices are true.
Question 22
Pug Marbury is looking at some indirect investment choices and notices one of them acts a lot like a mutual fund. Which of the following choices has he likely come across?
real estate investment trust
mortgage-backed security
limited partnership
commercial property
Question 23
Which is a characteristic of an exchange-traded fund (ETF)?
Shares are traded in the secondary market like shares in a closed-end fund.
Shares trade at the net asset value like shares in an open-end fund.
The number of shares outstanding is fixed as in a closed-end fund.
The shares are invested only in common stock of publicly traded corporations.
Question 24
Most open-end mutual funds charge a front-end load, which is
a sales charge or commission paid by investors each year that they own shares in the fund.
a brokerage fee that is paid to a broker for selling mutual funds in the secondary market for an investor.
the annual expenses on the fund divided by the net asset value.
a sales charge or commission paid by an investor when purchasing shares in a mutual fund.
Question 25
Fees paid by mutual fund shareholders include all the following EXCEPT a(n)
10% fee on excess returns.
one-time sales charge assessed at the time of purchase.
annual account maintenance fee.
exchange fee when the investor transfers money from one fund to another.
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