for magz64 only
California
quiz__final_exam.pdf
Final Exam Started: Nov 16 at 2:51pm
Quiz Instructions
2 ptsQuestion 1
diversification
risk premium
random risk
none of the above
A portfolio attribute that can reduce investment risk.
2 ptsQuestion 2
opportunity
iron law of risk and return
risk
Often thought of as a possibility of loss, but a better definition is a variability of return.
2 pts
Inflation risk the risk that an investment's return may fall short of the inflation rate
Business cycle risk fluctuations in an investment's return resulting from fluctuations in the business cycle
Interest rate risk the risk that the price of a fixedreturn asset will decline if interest rates rise
Question 3
Match the term with the correct definition.
2 ptsQuestion 4
required rate of return
A realistic estimate of the minimum return an investment must offer to be attractive, given its degree of risk
management risk
business risk
financial risk
2 ptsQuestion 5
risk
return
Iron law of risk and return
Solid law of risk and return
The strong positive correlation between higher investment return and greater risk.
2 ptsQuestion 6
True
False
The longer the investment horizon, the greater odds of earning the average rate.
2 ptsQuestion 7
Right to vote
Preemptive right
Right to share in earnings or asset distributions
All of the above
Select the shareholder's rights.
2 ptsQuestion 8
True
False
Greater positive values of alpha signal greater investment appeal.
2 ptsQuestion 9
Preferred stock a hybrid security with characteristics of both common stock and bonds
common stock shares that give you an ownership interest in a company
Match the term with the correct definition
2 ptsQuestion 10
default risk
interest rate risk
both of the above
none of the above
Indicate the risk(s) of bond investment.
2 ptsQuestion 11
interest rate
coupon rate
investment rate
face value
An amount for which a bond is redeemed at maturity.
2 pts
regular dividend [ Choose ]
periodic share repurchases [ Choose ]
Question 12
Match the term to the correct definition.
stock dividend [ Choose ]
stock split [ Choose ]
2 ptsQuestion 13
True
False
A fund that issues or redeems shares at their NAVs is a closedend fund.
2 ptsQuestion 14
constant ratio plan
variable ratio plan
asset allocation mutual funds
equity ratio plan
A method of rebalancing a portfolio that places greater weight on under performing assets in a restoration.
2 ptsQuestion 15
stocks
bonds
mutual funds
none of the above
An investment company that invests in securities issued by corporations or governmental units.
2 ptsQuestion 16
24.8%
12%
5%
98%
You bought 100 shares of an openend mutual fund one year ago at $10 a share. You received a $0.50 per share distribution six months ago when the fund's NAV was $12.50 a share. If the fund's NAV at the end of the year was $12 a share, calculate your rate of return on the fund for the year.
2 ptsQuestion 17
bodily harm and property damage
personal injury to you, your family, and guests riding in your car
damage or loss of your car due to fire, theft, or collision
all of the above
Automobile insurance is meant to protect you against:
2 pts
Risk reduction [ Choose ]
Risk avoidance [ Choose ]
Risk transfer [ Choose ]
Risk retention [ Choose ]
Question 18
Match the term with the correct examples.
2 ptsQuestion 19
risk subtraction
risk appeal
risk reduction
all of the above
Which of the following is a strategy for risk management:
2 ptsQuestion 20
Match the term with the correct definition.
dwelling protection [ Choose ]
appurtenant structures [ Choose ]
unscheduled personal property [ Choose ]
2 ptsQuestion 21
True
False
Actual cash value is the amount needed to replace new for old, with no deduction for depreciation.
2 pts
property loss insurance [ Choose ]
personal liability insurance [ Choose ]
Question 22
Match the term with the correct definition.
2 ptsQuestion 23
simple life annuity
ESOP
profitsharing plan
SEP
A defined contribution plan with contributions contingent upon the profitability of the firm.
2 ptsQuestion 24
True
False
Retirement planning should change as circumstances change.
2 ptsQuestion 25
True
False
Retirement years are ones of dissavings, when the wealth accumulated over the preretirement years is slowly depleted.
2 ptsQuestion 26
single life annuity
profitsharing plan
IRA
none of the above
An individual retirement account that qualifies for special tax treatment under IRS regulations.
2 ptsQuestion 27
profit sharing plan
IRA
fixed annuity
reverse mortgage
Retirees remain in their home while accessing the home equity for supplemental income
2 pts
defined benefit plan [ Choose ]
defined contribution plan
Question 28
Match the term with the correct definition.
[ Choose ]
2 pts
Normal retirement age [ Choose ]
early retirement age [ Choose ]
Question 29
Match the term with the correct definition
2 pts
Management risk [ Choose ]
Business risk [ Choose ]
Financial risk [ Choose ]
Question 30
Match the term with the correct definition.
2 ptsQuestion 31
market timing
Buyandhold strategy
tax swap
DRIPs
A method of portfolio management that does not attempt to trade securities over economic status.
2 ptsQuestion 32
An actual return that investors expect to earn on a stock in an upcoming period.
risk return
expected risk return
expected total return
none of the above
2 ptsQuestion 33
reinvestment strategy
tax swap
market timing
none of the above
Selling a security to establish a tax loss and then reinvesting funds in a similar security.
2 pts
Growth company [ Choose ]
Income stocks [ Choose ]
Blue chip [ Choose ]
Cyclical stocks [ Choose ]
Special situation [ Choose ]
Question 34
Match the correct term to the definition.
2 ptsQuestion 35
Match the term with the correct definition.
face value [ Choose ]
coupon rate [ Choose ]
coupon bond [ Choose ]
zero coupon [ Choose ]
2 ptsQuestion 36
pricetoearnings analysis
alpha signal
stock split
none of the above
A method of valuing common stocks based on a company's expected future earnings.
2 ptsQuestion 37
Priceearnings ratio
earnings per share
stock price
price to earnings analysis
A company's total earnings divided by the total number of shares of common stock outstanding.
2 ptsQuestion 38
Investors who do not need income
Cautious investors
Risky investors
all of the above
Identify a type of investor
2 pts
load fund [ Choose ]
noload fund [ Choose ]
Question 39
Match the term with the correct definition
2 pts
global fund [ Choose ]
sector funds [ Choose ]
index fund [ Choose ]
money market fund [ Choose ]
Question 40
Match the term with the correct definition.
2 ptsQuestion 41
NAV
UIT
ETF
REIT
The net value of one mutual fund share determined by the net market value of the fund's shares.
2 ptsQuestion 42
The restoration of the financial state that existed before a loss.
indemnification
risk management
risk reduction
gambling
2 ptsQuestion 43
deductible clause
mortgage clause
subrogation clause
none of the above
Places your right to sue after the insurer's.
2 ptsQuestion 44
Personal injury protection
general injury protection
no fault protection
verbal threshold
Mandatory coverage in nofault states that covers expenses for personal injury, regardless of fault
2 ptsQuestion 45
True
False
It is pure risk we seek to protect against when we purchase insurance.
2 ptsQuestion 46
True
False
Adequate liability protection is a must before an accident occurs.
2 ptsQuestion 47
Quiz saved at 1:10pm
Fixed annuity [ Choose ]
Variable annuity [ Choose ]
Match the term with the correct definition.
2 pts
Joint and last survivor annuity [ Choose ]
Single life annuity [ Choose ]
Question 48
Match the term with the correct definition.
2 ptsQuestion 49
True
False
Vested benefits are accumulated pensions benefits based on previous credited service.
2 ptsQuestion 50
True
False
It is estimated that by year 2030 there will be only two and onehalf working persons for each elderly person.
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