BUSN 380 Week 4 Quiz Set 1
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Question 1. Question : (TCO 5) Which of the following statements is false?
No one is going to make you save the money; you need to start a program.
To be useful, investment objectives must be very specific.
Investment goals can be different for each individual.
Because investment objectives deal with the future, it is useful to plan more than 5 years in the future.
A long-term investment objective involves a time period of 2 years or less.
Question 2. Question : (TCO 5) Good advice for a potential investor starting an investment program includes all but which of the statements below?
Work to balance your budget.
Increase credit purchases and make installment payments in order to increase cash available for investing.
Establish specific and measurable investment goals.
Start an emergency fund.
Establish a line of credit.
Question 3. Question : (TCO 5) You currently hold a $1,000 corporate bond; however, if interest rates in the overall economy increase, which of the following is most likely to be the market value of this bond?
The value of the bond will not change.
It is impossible to determine whether the bond's value will increase or decrease.
Question 4. Question : (TCO 5) Which of the following individuals should have the highest tolerance for risk?
Joan Cummings, who is a single mother with two small children
Darren Carter, who works for American Airlines and is worried that he is going to be laid off soon
Barry Parks, who is an investment banker and earns over $200,000 per year
Michael Clark, who is 74 years old and been retired for 6 years
Fred Funderbunk, who delivers pizzas and makes about $15,000 per year
Question 5. Question : (TCO 5) Which of the following statements is false?
When choosing an investment, it is necessary to consider the risk factor.
During inflationary times, there is a risk that the financial return on an investment will not keep pace with the rate of inflation.
The interest rate risk associated with investments in bonds is the result of changes in business conditions faced by companies.
The risk of business failure deals with changes in the value of stocks and bonds due to changes and risks within a business itself.
The prices of stocks, bonds, and other investments fluctuate in the market.
Question 6. Question : (TCO 5) A $1,000 corporate bond pays 9.0% a year. What is the annual interest you will receive?
Question 7. Question : (TCO 5) Jeremy is 22 years old and single. He recently graduated from college and started his career making $30,000 a year. He has come to you asking for advice regarding a long-term investment program. What would you recommend?
A money-market fund
Question 8. Question : (TCO 5) John Farmer recently received a legal form from the company where he owns stocks that list the issues to be decided at the annual stockholders' meeting. The item asks that he signs something that allows someone else to vote for him. What has he received?
None of the above
Question 9. Question : (TCO 5) Matt Dannon just bought the stock of a company that provides him with the responsibility to approve major company actions. Which one of the following best characterizes this responsibility?
None of the above
Question 10. Question : (TCO 5) If Orlando Blodgett is buying the stock of the Getaway Caribbean Cruise Company. If he buys the stock today, knowing it is the first day it is selling without the dividend for this quarter, on what date is Orlando buying the stock?
Ex dividend date
None of the above
Question 11. Question : (TCO 5) Bill Affleck is interested in buying preferred stock, but to be protected if the company needs to omit a dividend payment. He wants any unpaid dividends to accumulate and be paid before any common stock dividends are paid. Which one of these features of preferred stock is Bill seeking?
None of the above
Question 12. Question : (TCO 5) A very safe investment that generally attracts conservative investors is called a(n) _____ stock.
Question 13. Question : (TCO 5) One option for long-term corporate financing is equity financing, and this is a popular choice because
a lender is always available to provide this type of financing.
it does not cost anything to sell in the primary market.
repayment doesn't have to be made for 10 years or more.
only interest must be paid for the first 5 years.
it does not have to be repaid.
Question 14. Question : (TCO 5) Assume that you purchased a $1,000 Exxon bond that pays 8.5% interest. What is the amount of interest you would receive every 6 months?
Question 15. Question : (TCO 5) What is the approximate market value for a $1,000 corporate bond that pays 7% interest when comparable bonds are paying 8% interest?
Question 16. Question : (TCO 5) The _____ describes legal conditions for a corporate bond.
Question 17. Question : (TCO 5) A _____ bond is backed only by the reputation of the issuing corporation.
Question 18. Question : (TCO 5) You have been thinking about investing in corporate bonds, but are seeking the most secure bond investment possible. Most likely, you would want to select _____ bonds.
Question 19. Question : (TCO 5) If a corporation is allowed to buy outstanding bonds from current bondholders before the maturity date, this is referred to as
a flexible bond.
a convertible option.
a call feature.
a free purchase.
Question 20. Question : (TCO 5) A government security issued in minimum units of $100 with a 30-year maturity is called a
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