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Question 1.1. (TCO 5) If an investment objective is considered to be intermediate term, then this means the goal should be achieved in what time frame? (Points : 1)

       Less than 2 years        Over 10 years        More than 5 years        In 1–5 years        None of the above

Question 2.2. (TCO 5) If an investment objective is considered to be long term, then this means the goal should be achieved in what time frame? (Points : 1)

       Less than 2 years        In 2–5 years        More than 5 years        Less than 1 year        None of the above

Question 3.3. (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? (Points : 1)

       $900        $1,100        $1,000        The value of the bond will not change.        It is impossible to determine whether the bond's value will increase or decrease.

Question 4.4. (TCO 5) The market value of a corporate bond with a fixed interest rate will _____ if interest rates in the overall economy decrease. (Points : 1)

       increase        not change        decrease        become worthless        It is impossible to determine whether the bond's value will increase or decrease.

Question 5.5. (TCO 5) Mary Ann recently received a $20,000 gift from her uncle and is considering investing in stocks, because she knows that historically they have earned an approximately 10–12% rate of return over the last few years. Referring to aspects of investing, Mary Ann is most concerned about which of the following? (Points : 1)

       Risk        Return        Diversification        Liquidity        Income

Question 6.6. (TCO 5) A $1,000 corporate bond pays 6.5% a year. What is the annual interest you will receive?  (Points : 1)

        $0.65         $6.50         $65.00         $1,060.50         $1,065.00

Question 7.7. (TCO 5) Investments can be affected by all of the following risks except (Points : 1)

       inflation.        global risks.        individual selection.        business failure.        market risks.

Question 8.8. (TCO 5) Tracey Hernandez is 26 and has saved enough money for an emergency fund, along with an additional $4,500 for an investment program. She is single with no dependents and has a desire to retire at 65. What would best characterize Ms. Hernandez's investment goal? (Points : 1)

       Beta        Income        Growth        Risk        Liquidity

Question 9.9. (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? (Points : 1)

       Voting rights        Proxy        Equity        Dividends        None of the above

Question 10.10. (TCO 5) Beverly Frickel purchased 100 shares of Gleason Systems stock for $32.50 per share. Her commission for this purchase was $25. She sold the stock 2 years later for $45 per share and a commission of $40. While she held the stock it paid a dividend of $1.50 per share. What was Beverly's total dollar return on this stock? (Points : 1)

       $1,355        $1,335        $65        $1,375        $1,400

Question 11.11. (TCO 5) Lindsey Holt owns stock in the Galloway Gems Company. She knows she will receive a $1.50 dividend each quarter. Given this, you know for sure that she purchased which type of stock? (Points : 1)

       Preferred        Common        Blue chip        Growth        Penny

Question 12.12. (TCO 5) Common stock represents _____. (Points : 1)

       a loan to a company        corporate ownership        a loan to an investor        a guarantee of dividends        a cash distribution

Question 13.13. (TCO 5) You have purchased preferred stock that can be exchanged for common stock at your option. What kind of stock is this? (Points : 1)

       Convertible        Participating        Cumulative        Callable        None of the above

Question 14.14. (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? (Points : 1)

       $42.50        $8.50        $85        $4.25        $1,000

Question 15.15. (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? (Points : 1)

       $800        $875        $70        $1,142        $1,000

Question 16.16. (TCO 5) Which of the statements below is false? (Points : 1)

       Stock is a form of equity capital.        Stock does not have a maturity date.        Bonds are a form of debt capital.        Bonds do not have to be repaid at maturity.        Interest payments are made to bondholders.

Question 17.17. (TCO 5) A _____ bond is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to both income and assets. (Points : 1)

       subordinated debenture        mortgage        debenture        preemptive        Treasury

Question 18.18. (TCO 5) A(n) _____ bond is one that can be exchanged, at the owner's option, for a specified number of shares of the corporation's stock. (Points : 1)

       debenture        convertible        indenture        flexible        subordinated

Question 19.19. (TCO 5) A(n) _____ fund is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue. (Points : 1)

       serial        indenture        debenture        sinking        money

Question 20.20. (TCO 5) A _____ bond is registered in the owner's name by the issuing company. (Points : 1)

       certified        coupon        general obligation        zero-coupon        registered