QUESTION Which of the following is NOT a benefit of a mutual fund? A) They can be traded by investors at will. B) They are managed by professionals with investment expertise. C) They distribute risk across a variety of securities. D) They offer a wide range of investment strategies. E) They are an economical way […]
Date: September 3rd, 2020
QUESTION What is the difference between a stock’s par value and its market value? What will be an ideal response? ANSWER Answer: The par value of a stock is set by the issuing corporation; it is an arbitrary figure. The market value of a stock is the price it is currently selling for. The […]
Date: September 3rd, 2020
QUESTION Which of the following lists mutual fund types from lowest potential risk to highest potential risk? A) balanced < index < sector < money market B) index < balanced < money market < sector C) money market < index < balanced < sector D) sector < index < balanced < money market E) money […]
Date: September 3rd, 2020
QUESTION What are serial bonds, and what benefit do they offer the issuer? What will be an ideal response? ANSWER Answer: Serial bonds are bonds that mature at different dates. By not maturing at the same time, the issuer does not have to repay the bonds all at once. This helps the issuer avoid […]
Date: September 3rd, 2020
QUESTION What type of mutual fund reflects an investment strategy focused on achieving the highest yield? A) growth B) income C) index D) specialty E) global ANSWER Answer: B Explanation: B) The strategy seeking to obtain the highest yield is investing for income. Income mutual funds invest in securities that pay high dividends and […]
Date: September 3rd, 2020
QUESTION When placing an order regarding a particular security, what three points of information must be specified? What will be an ideal response? ANSWER Answer: 1. whether you want to buy or sell the security 2. how many shares to buy or sell 3. the conditions for the order Explanation: When placing an order […]
Date: September 3rd, 2020
QUESTION Ron has entered the high-stakes world of commodities trading. On April 1, he signed a futures contract to buy 200 metric tons of soybeans on October 1 at $526 per metric ton. The current price is $485 per metric ton. What will the price be on October 1 for Ron to join the rarefied […]
Date: September 3rd, 2020
QUESTION What is diversification from an investment perspective? What will be an ideal response? ANSWER Answer: Diversification is owning a variety of different securities types in an investment portfolio. Following this approach means that a serious decline in the value of a particular security will not have a dramatic impact on the entire portfolio. […]
Date: September 3rd, 2020
QUESTION Which of the following lists investment strategies in order from lowest risk to highest risk? A) investing for growth < buying and holding < market timing < investing for income < value investing B) buying and holding < investing for income < investing for growth < value investing < market timing C) value investing […]
Date: September 3rd, 2020
QUESTION When the U.S. housing market recovers after the Great Recession and homes are being built at a rapid pace, this will have a direct impact on the price of which commodity? A) gold B) coffee beans C) appliances D) lumber E) gasoline ANSWER Answer: D Explanation: D) In an economic expansion that is […]
Date: September 3rd, 2020
