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3

A disadvantage of debt investments is:
1. that they tend to be riskier than many other types of investments.
2. that they tend to have lower liquidity than many other types of investments.
3. that they tend to have lower rates of return than many other types of investments.
4. all of the above.

3

Active investors:
1. are willing to accept much higher risk than passive investors.
2. believe the market is inherently efficient, whereas passive investors do not.
3. are more interested in short-term gains than passive investors.
4. are more likely to invest in stock than passive investors.

3

The first step in the investment planning process is to:
1. estimate how much you need to accumulate.
2. evaluate your risk tolerance.
3. identify your goals.
4. learn about investment alternatives.

3

If you start doing your own laundry instead of taking it to the cleaners, this is an example of:
1. paying yourself first.
2. going on a financial diet.
3. stopping up a cash leak.
4. continuing a payment plan.

3

A major difference between stock and bond investments is that:
1. it is possible to earn current income on bonds but not on stocks.
2. stocks have a fixed maturity, but bonds do not.
3. bonds can be issued by governments, but stock cannot.
4. all of the above.

4

Before you begin to develop an investment plan, you should:
1. Establish financial goals
2. Reduced outstanding high-interest credit
3. Establish an emergency fund
4. All of the above

3

Real estate generates return on investment through:
1. Cash flows from net rental income
2. Capital gains from the growth in the property's value
3. Both of the above
4. None of the above

1

Advantages of equity investments include:
1. If a company you own does very well, your income stream may increase over time
2. Stable cash flows
3. A known date and amount that your investment will be returned
4. All of the above

4

Studies have indicated differences between men and women in investing, including:
1. Women tend to be more conservative investors than men
2. Women investors ended up with better overall performance than the men.
3. Men made more trades
4. All of the above

1

Which of the following has the highest return on investment over time?
1. Stocks
2. Bonds
3. Bank savings accounts
4. Cash

2

Diversification is a tool to:
1. Maximize return in the portfolio
2. Reduce risk in a portfolio
3. Increase portfolio income
4. All of the above

4

As an investor, your return on investment will be derived from:
1. Interest
2. Dividends
3. Capital gains
4. All of the above

1

Which of the following is a characteristic of a bond?
1. A known maturity date when your investment will be returned to you
2. A variable dividend based on company profits
3. Both of the above
4. None of the above

4

To accumulate the funds to achieve your goals you need to:
1. Save and invest on a regular basis
2. Stick to a budget
3. Make informed investment decisions
4. All of the above

4

Which of the following is a passive investing strategy?
1. Buy and hold
2. Dollar cost averaging
3. Indexing
4. All of the above

3

Which of the following statements regarding asset allocation is false?
1. If you have invested in several broad investment classes, you are practicing asset allocation.
2. Studies have shown that as much as 90 percent of overall long-term performance of a portfolio is attributable to the asset allocation mix.
3. An investor's asset allocation mix should not change over time.
4. All of the above are true.

3

Which of the following investments has the greatest risk?
1. Bank CD's
2. Bonds
3. Common stock
4. Preferred stock

4

Advantages of investing in fixed income investments include:
1. Higher risk and returns than equity investments
2. If a company you invested in does well, your income stream may increase over time
3. Certainty that you will not lose any money
4. None of the above

1

As a stockholder you are:
1. Entitled to vote on major issues
2. Guaranteed a minimum interest payment on your investment
3. Given priority above debt investors in the event of a company bankruptcy
4. All of the above

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