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Exam 1: The Investment Environment

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Question 21

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A collection of securities designed to meet an investment goal is called a portfolio.

A) True
B) False

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Question 22

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Jobs in which of the following fields require an understanding of the investment environment? I. commercial banking II. corporate finance III. financial planning IV. insurance

A) I and IV only
B) I, II and IV only
C) II, III and IV only
D) I, II, III and IV

E) None of the above
F) A) and B)

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Question 23

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Institutional investors manage money for businesses and nonprofit organizations, but not for individuals.

On a net basis, funds in the financial markets are generally supplied by

U.S. Treasury Bills mature in 1 year or less.

An option to purchase common stock is a type of derivative security.

An exchange traded fund that invests in the stocks of large corporations is an example of

Certified Financial Planners typically manage institutional portfolios.

A major function of investment banking firms is

Which of the following investments represents partial ownership of a corporation?

Retirement plans, such as a 401(k), allow employees to defer taxes on the plan contributions until such time as the funds are withdrawn from the retirement plan.

Exchange traded funds are similar to mutual funds, but are traded like stocks.

Discuss the general investment philosophy and the types of investments preferred by investors in each phase of the life cycle.

A well-conceived investment policy statement will take into account

Stringent regulations and vigorous enforcement have all but eliminated unethical behavior by financial professionals in recent years.

In the financial markets, individuals are net suppliers of funds.

Short-term investments I. provide liquidity. II. fill an important part of most investment programs. III. provide a high rate of return with low risk. IV. provide resources for emergencies.

A person's marginal tax rate is the rate they pay

A United States Savings Bond is an example of an investment as defined in the text.

Bond investors lend their money for a fixed period of time and receive interest.