Management

The primary benefit of diversification is that it

The primary benefit of diversification is that it

The primary benefit of diversification is that it
A) increases stock volatility.
B) reduces the exposure of your investments to adverse effects of any individual investment.
C) is convenient.
D) is cheaper.

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tityl

You can reduce investment risk by investing in

You can reduce investment risk by investing in

You can reduce investment risk by investing in
A) a portfolio.      B) a corporate bond.      C) corporate stocks.      D) real estate.

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tityl

The objective of asset allocation is

The objective of asset allocation is

The objective of asset allocation is
A) to make investment decisions easier.
B) to achieve a desired return on investment and eliminate the adverse risk of investing.
C) to ensure the returns of the individual investments within a por

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tityl

Asset allocation is the process of dividing money across financial assets which include all of the f

Asset allocation is the process of dividing money across financial assets which include all of the f

Asset allocation is the process of dividing money across financial assets which include all of the following except
A) bonds.      B) mutual funds.      C) real estate.      D) stocks.

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tityl

Before investing in mutual funds, discuss other issues that you would wish to address in your overal

Before investing in mutual funds, discuss other issues that you would wish to address in your overal

Before investing in mutual funds, discuss other issues that you would wish to address in your overall financial plan.

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tityl

Which of the following statements about hedge funds is not true?

Which of the following statements about hedge funds is not true?

Which of the following statements about hedge funds is not true?
A) Charge high management fees
B) Exposed to very little risk
C) Require a large initial investment
D) Sell shares to wealthy individuals and financial institutions

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tityl

An arrangement offered by some brokerage firms that enable investors to diversify among various mutu

An arrangement offered by some brokerage firms that enable investors to diversify among various mutu

An arrangement offered by some brokerage firms that enable investors to diversify among various mutual funds and receive summary statement information is called a
A) mutual fund security.      B) mutual fund family.
C) mutual

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tityl

The best investment strategy is to

The best investment strategy is to

The best investment strategy is to
A) buy only one or two stock mutual funds.
B) diversify across stock and bond mutual funds with different objectives.
C) buy individual stocks and bonds in different sectors.
D) hold only bond mu

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tityl

List five considerations or characteristics when purchasing a mutual fund.

List five considerations or characteristics when purchasing a mutual fund.

List five considerations or characteristics when purchasing a mutual fund.

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tityl

A stock mutual fund's prospectus typically states that the fund is subject to all of the following r

A stock mutual fund's prospectus typically states that the fund is subject to all of the following r

A stock mutual fund's prospectus typically states that the fund is subject to all of the following risks except
A) default risk.      B) general decline in the stock market.
C) substantial declines in individual stocks.&

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tityl

The best way to predict a mutual fund's performance is to

The best way to predict a mutual fund's performance is to

The best way to predict a mutual fund's performance is to
A) look it up on the Internet.
B) study the investment strategy as it relates to the current economic conditions.
C) look at past performance.
D) ask your stock broker

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tityl

You may purchase an open-end no-load mutual fund in all of the following ways except

You may purchase an open-end no-load mutual fund in all of the following ways except

You may purchase an open-end no-load mutual fund in all of the following ways except
A) by U.S. mail.      B) over the phone.      C) over the Internet.      D) from a broker.

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tityl

The most important expense statistic mentioned in the prospectus is

The most important expense statistic mentioned in the prospectus is

The most important expense statistic mentioned in the prospectus is
A) gross profit margin ratio.      B) times interest earned ratio.
C) the expense ratio.      D) back-end load ratio.

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tityl

In deciding if a no-load mutual fund is a good investment for you, you should carefully consider all

In deciding if a no-load mutual fund is a good investment for you, you should carefully consider all

In deciding if a no-load mutual fund is a good investment for you, you should carefully consider all of the following except
A) the fund's investment strategy.      B) the broker's recommendations.
C) the fund'

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tityl

In considering various fund characteristics, which of the following should you not consider?

In considering various fund characteristics, which of the following should you not consider?

In considering various fund characteristics, which of the following should you not consider?
A) Minimum investment      B) S & P ratings
C) Investment objective      D) Investment company

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tityl

Before investing in a mutual fund the very least you should do is

Before investing in a mutual fund the very least you should do is

Before investing in a mutual fund the very least you should do is
A) consult a certified financial planner.      B) open an account with a broker.
C) consult an attorney.      D) read the prospectus.

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tityl

A(n) ________ is a document that provides financial information about a mutual fund, including expen

A(n) ________ is a document that provides financial information about a mutual fund, including expen

A(n) ________ is a document that provides financial information about a mutual fund, including expenses and past performance.
A) annual report      B) financial statement      C) prospectus      D) ba

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tityl

Arrange the following five stock funds starting with the highest return and risk to the lowest: inde

Arrange the following five stock funds starting with the highest return and risk to the lowest: inde

Arrange the following five stock funds starting with the highest return and risk to the lowest: index fund, capital appreciation, Internet sector fund, income fund, growth stock fund.

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tityl

Arrange the following five bond funds starting with the lowest return and risk to the highest: long-

Arrange the following five bond funds starting with the lowest return and risk to the highest: long-

Arrange the following five bond funds starting with the lowest return and risk to the highest: long-term global, short-term T-bond, intermediate-term corporate, long-term high-yield, long-term Ginnie Mae.

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tityl

List the following four types of medium-term bond mutual funds in order starting with the lowest def

List the following four types of medium-term bond mutual funds in order starting with the lowest def

List the following four types of medium-term bond mutual funds in order starting with the lowest default risk to the highest: Ginnie Mae, corporate, high-yield.

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tityl

If a mutual fund's performance is the result of factors in the general stock market, the fund is bei

If a mutual fund's performance is the result of factors in the general stock market, the fund is bei

If a mutual fund's performance is the result of factors in the general stock market, the fund is being impacted by the ________ risk.

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tityl

What would be the tax consequence of owning a mutual fund that made distributions of $600 resulting

What would be the tax consequence of owning a mutual fund that made distributions of $600 resulting

What would be the tax consequence of owning a mutual fund that made distributions of $600 resulting from short-term gains and $800 resulting from long-term gains assuming a 30% tax bracket and a 10% capital gains rate?
A) $260     

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tityl

The susceptibility of a mutual fund's performance to general stock market conditions is known as

The susceptibility of a mutual fund's performance to general stock market conditions is known as

The susceptibility of a mutual fund's performance to general stock market conditions is known as
A) interest rate risk.      B) exchange risk.      C) market risk.      D) corporate risk.

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tityl

Investors can earn a return on an investment in a mutual fund in all of the following ways except

Investors can earn a return on an investment in a mutual fund in all of the following ways except

Investors can earn a return on an investment in a mutual fund in all of the following ways except
A) redeeming shares.      B) capital gains distributions.
C) dumping the fund after a couple of bad years.     

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tityl

Which of the following bond mutual funds has both the lowest default risk and interest rate risk?

Which of the following bond mutual funds has both the lowest default risk and interest rate risk?

Which of the following bond mutual funds has both the lowest default risk and interest rate risk?
A) Short-term high yield      B) Long-term corporate
C) Short-term Treasury      D) Long-term Ginnie Mae

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tityl

Which of the following bond mutual funds has both the highest default risk and interest rate risk?

Which of the following bond mutual funds has both the highest default risk and interest rate risk?

Which of the following bond mutual funds has both the highest default risk and interest rate risk?
A) Short-term corporate      B) Long-term Treasury
C) Long-term high-yield      D) Short-term Ginnie Mae

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tityl

High yield bond funds have a ________ potential return and ________ risk.

High yield bond funds have a ________ potential return and ________ risk.

High yield bond funds have a ________ potential return and ________ risk.
A) low; low      B) low; high      C) high; high      D) high; low

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tityl

Treasury bond funds with short maturities have ________ default risk and ________ interest rate risk

Treasury bond funds with short maturities have ________ default risk and ________ interest rate risk

Treasury bond funds with short maturities have ________ default risk and ________ interest rate risk.
A) high; high      B) high; low      C) limited; high      D) low; limited

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tityl

The possibility that the Fed may raise the discount rate is an example of

The possibility that the Fed may raise the discount rate is an example of

The possibility that the Fed may raise the discount rate is an example of
A) exchange rate risk.      B) political risk.      C) liquidity risk.      D) interest rate risk.

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tityl

Which of the following is not a source of profits for owners of a stock mutual fund?

Which of the following is not a source of profits for owners of a stock mutual fund?

Which of the following is not a source of profits for owners of a stock mutual fund?
A) Interest distributed by the mutual fund
B) Capital gains distributed by the mutual fund
C) Dividends distributed by the mutual fund
D) Capital

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tityl

A mutual fund must distribute ________ to investors in the same year as earned.

A mutual fund must distribute ________ to investors in the same year as earned.

A mutual fund must distribute ________ to investors in the same year as earned.
A) capital gains      B) profits      C) dividends      D) Both A and C.

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tityl

Investors in high tax brackets will normally achieve higher performance by selecting mutual funds th

Investors in high tax brackets will normally achieve higher performance by selecting mutual funds th

Investors in high tax brackets will normally achieve higher performance by selecting mutual funds that generate
A) long-term stock dividends.      B) long-term capital gains.
C) long-term dividends.      D) sho

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tityl

A mutual fund that invests only in healthcare-related companies is an example of a(n) ________ fund.

A mutual fund that invests only in healthcare-related companies is an example of a(n) ________ fund.

A mutual fund that invests only in healthcare-related companies is an example of a(n) ________ fund.

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tityl

A fund that would appeal to an investor who did not have strong opinions about which stocks to purch

A fund that would appeal to an investor who did not have strong opinions about which stocks to purch

A fund that would appeal to an investor who did not have strong opinions about which stocks to purchase would be a(n)
A) exchange-traded fund.      B) index fund.
C) growth fund.      D) sector fund.

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tityl

Which of the following statements regarding technology funds is not true?

Which of the following statements regarding technology funds is not true?

Which of the following statements regarding technology funds is not true?
A) They have a low degree of risk.
B) These firms are relatively young.
C) They do not have a consistent record of strong performance.
D) They have potentia

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tityl

Index funds are popular for all of the following reasons except

Index funds are popular for all of the following reasons except

Index funds are popular for all of the following reasons except
A) they are not actively managed.
B) they incur low expenses.
C) their performance relative to other mutual funds.
D) performance is frequently lower than actively ma

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tityl

________ mutual funds invest in foreign bonds as well as U.S. bonds.

________ mutual funds invest in foreign bonds as well as U.S. bonds.

________ mutual funds invest in foreign bonds as well as U.S. bonds.
A) Treasury bond      B) Index      C) International bond      D) Global bond

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tityl

International bond funds are (Multiple Choice Question)

International bond funds are (Multiple Choice Question)

International bond funds are
A) subject to exchange risk.      B) offer a higher yield than U.S. bonds.
C) issued by non-U.S. firms or governments.      D) All of the above.

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tityl

High yield (junk) bond funds focus on relatively risky bonds issued by firms that are subject toA) i

High yield (junk) bond funds focus on relatively risky bonds issued by firms that are subject toA) i

High yield (junk) bond funds focus on relatively risky bonds issued by firms that are subject to
A) interest rate risk.      B) exchange risk.      C) management risk.      D) default risk.

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tityl

Global funds are not usually subject to the following risk?

Global funds are not usually subject to the following risk?

Global funds are not usually subject to the following risk?
A) Political      B) Liquidity      C) Exchange      D) Interest rate

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tityl