QUESTION The NASDAQ Composite Index only tracks the stocks of U.S. technology companies. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The NASDAQ Composite Index tracks domestic and foreign stocks listed on the NASDAQ exchange. Many companies on the NASDAQ are in the high-technology sector.
QUESTION Suppose that a mortgage broker arranges for a subprime loan for a person who could have qualified for a conventional loan. The possibility of a conventional loan was never mentioned to the customer. Has the mortgage broker violated ethics guidelines? A) No, as long as the mortgage broker did not lie or use coercion […]
QUESTION The purchase and sale of shares in exchange-traded funds can be executed at any time when the markets are open. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Unlike traditional mutual funds, ETFs can be traded throughout the trading day.
QUESTION When is taking out a subprime loan to buy a house most likely to be a reasonable financial decision? A) Qualifying for a conventional loan is impossible. B) Owning a home is an important life goal for the borrower. C) Adjustable rates are likely to be higher than fixed rates. D) The borrower reasonably […]
QUESTION A no-load mutual fund can still have costs for its investors. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: No-load mutual fees have no sales charges for investors; however, they may charge management fees to cover operating costs.
QUESTION Which of the following, if true, strengthens the argument of Domino Grace’s management? A) Higher revenues would lead to higher profits for Domino Grace. B) If the derivative investments perform poorly, managers at Domino Grace will not pay any financial penalties. C) Domino Grace financial advisors are well-trained in handling complicated investment options. D) […]
QUESTION Suppose that investments in derivatives generated $5 million of revenue for Domino Grace during this calendar year. The managers who proposed offering derivatives contend that this statistic demonstrates that offering derivatives increased Domino Grace revenues this calendar year by $5 million. Which of the following points out a flaw in this argument? A) It […]
QUESTION Which of the following, if true, weakens the argument of Domino Grace’s management? A) Competitors of Domino Grace have lured new customers by offering access to exotic new investment options. B) A new political administration is expected to pass new financial regulations affecting derivative investments. C) Derivative investments are similar to most investments in […]
QUESTION Which of the following, if true, might make the option more appealing to a prospect? A) In recent months, the stock market has become more bullish, making mutual funds a better bet. B) The firm pays the maintenance fees for the investments. C) Employees may choose the amount set aside each month, up to […]
QUESTION Douglas & Reynolds, an American financial firm, has recently fallen on hard times. Its CEO notes that the firm has lost money for three straight years. Over the same period, the euro has lost 15 percent of its value while the Chinese yuan has increased its value by 15 percent. He, therefore, concludes that […]
