BUS6600: M8 - Quiz | Score for this quiz: 100 out of 100 | Submitted Mar 9 at 12:20pm ...

BUS6600: Survey of Business Concepts

M8 - Quiz
Started: Mar 9 at 12:20pm

Question 1                           4 / 4 pts
The first step you would take to get control of your personal finances is to

•   prepare a budget. 
•   keep track of all your expenses. 
•   start a savings program. 
•   take inventory of your assets. 

 
Question 2                           4 / 4 pts
For a young person, one of the worst places to invest money for the long-term is in

•   a home. 
•   a duplex. 
•   a bank savings account. 
•   the stock market. 

 
Question 3                           4 / 4 pts
Investments in IRA accounts

•   are matched by the employer. 
•   are taxed at the lowest individual tax rate regardless of the actual tax bracket of the investor. 
•   can be in stocks, bonds, mutual funds, or even precious metals. 
•   are limited to money market funds and government bonds. 

 
Question 4                           4 / 4 pts
A comparison of variable life insurance to a standard whole life plan would reveal that

•   variable life offers only pure insurance but does so at a very low cost, while a standard whole life plan costs more but offers both insurance and a savings plan. 
•   they are essentially identical. 
•   variable life is only available to people who want at least $1 million in coverage—and are willing to pay for it. 
•   both a standard whole life and variable life insurance offer both life insurance and savings, but variable life invests the savings more aggressively than whole life. 

Question 5                           4 / 4 pts
Throughout history an investment in __________ has yielded an excellent return, regardless of the state of the economy or political changes.

•   antiques 
•   savings accounts 
•   a good education 
•   government bonds 

 
Question 6                           4 / 4 pts
According to contrarians, the big decline in the stock market during the Great Recession was

•   a great opportunity to invest in stocks. 
•   proof that the future of capitalism should rely more on small, unincorporated businesses rather than big corporations. 
•   a sign that more government regulation was needed to prevent big losses. 
•   proof that the stock market was not as sound an investment as most people thought. 

 
Question 7                           4 / 4 pts
One disadvantage of term life insurance is that

•   it is generally not available to young people. 
•   when renewed it usually is at a higher premium. 
•   it is pure insurance protection for a given time period. 
•   the risk of lost income from the death of the insured is shifted to the insurance company. 

 
Question 8                           4 / 4 pts
A contract that calls for regular payments to an individual for life or for a fixed period of time is called a(n)

•   level premium agreement. 
•   fixed dividend plan. 
•   annuity. 
•   mutual fund. 

 
Question 9                           4 / 4 pts
Mortgage interest payments and property taxes are

•   both likely to decline the longer you own the home. 
•   expenses that make home ownership less attractive than renting. 
•   tax deductible for homeowners. 
•   both likely to increase each year at a faster rate than your income. 

Question 10                           4 / 4 pts
A homeowner's insurance policy that includes a provision for __________ would provide the homeowner with enough cash to replace the items lost with new items.

•   cash in lieu of coverage 
•   full collateral damage protection 
•   guaranteed replacement cost 
•   actual book value protection 

 
Question 11                           4 / 4 pts
One disadvantage of having credit cards for personal use is that

•   they offer no protection if they are stolen. 
•   many companies have a policy that prevents employees from having both personal credit cards and credit cards for business use. 
•   they are less convenient than other forms of credit. 
•   they can make it easy to pile up a large amount of debt quickly. 

 
Question 12                           4 / 4 pts
For workers who qualify, the earnings from income invested in a traditional IRA are

•   taxed at the time they are earned, but at the lowest individual rate. 
•   never taxed. 
•   taxed both at the time the money is earned and at the time the earnings are withdrawn. 
•   not taxed until the funds are withdrawn. 

 
Question 13                           4 / 4 pts
Which organization provides an assessment of the relative level of risk of a particular firm's bond issue?

•   Standard & Poor's
•   E*trade 
•   Wall Street Journal 
•   Securities and Exchange Commission 

 
Question 14                           4 / 4 pts
Online trading services target those investors who

•   trade the securities of foreign firms. 
•   are interested in purchasing government bonds. 
•   are willing to do their own research. 
•   require the research and advice of a licensed stockbroker. 

Question 15                          4 / 4 pts
Which of these offers low risk, guaranteed income, and the backing by the full faith and credit of the federal government?

•   common stock in the U.S. postal service 
•   U.S. government bonds 
•   municipal bonds 
•   U.S. government preferred stocks 

 
Question 16                           4 / 4 pts
Corporations issuing __________ bonds pledge a tangible asset as collateral to reduce the risk incurred by a bondholder.

•   replacement 
•   secured 
•   escrow 
•   endorsement 

 
Question 17                           4 / 4 pts
Each share of common stock provides the investor with a __________ right that offers the investor the first right to purchase any new shares of common stock the firm decides to issue. This allows common stockholders to maintain a proportional share of ownership in the company.

•   preemptive 
•   participating 
•   convertible 
•   cumulative 

Question 18                           4 / 4 pts
A mutual fund company buys securities from corporations and governments and packages them together into a mutual fund. It then

•   deposits the mutual fund into a pension fund for institutional investors. 
•   charges investors a fee to find out how these investments fared, so that investors can decide for themselves as to whether they want to own the investments. 
•   gives investors the option to bid on a share of this investment. 
•   sells shares of this packaged investment to interested investors. 

 
Question 19                          4 / 4 pts
Buying stock on margin allows an investor to borrow funds from the brokerage company as part of the transaction. This __________ the potential return to the investor and __________ the risk.

•   decreases; increases 
•   increases; decreases 
•   decreases; decreases 
•   increases; increases 

 
Question 20                           4 / 4 pts
Issuing __________ increases a firm's debt and may adversely affect the financial community's perception of the firm.

•   common stock 
•   retained earnings 
•   preferred stock 
•   bonds 

 
Question 21                           4 / 4 pts
An organization whose members can buy and sell securities for companies and investors is known as a

•   stock exchange. 
•   transfer medium. 
•   public securities dealer. 
•   securities facilitator. 

 
Question 22                           4 / 4 pts
Firms establish a __________ so that sufficient funds are available to repay bondholders on the maturity date.
  sinking fund 
  retirement account 
  encumbered account 
  mutual fund 
 
Question 23                           4 / 4 pts
Of the five criteria for selecting an investment option, which one measures how quickly an investor has access to his/her invested funds, if they are needed?

•   liquidity 
•   yield 
•   tax consequences 
•   risk 

Question 24                           4 / 4 pts
Using information not available to the public to unfairly benefit in the stock market represents

•   an unethical, but a legal activity. 
•   insider trading. 
•   security fraud. 
•   blue-sky violations. 

 
Question 25                           4 / 4 pts
Diversification means

•   buying investments on margin. 
•   being knowledgeable about the various types of investment opportunities. 
•   allocating your investment funds to several types of investments. 
•   allocating all your investment funds into one type of investment.