Personal finance CH 19

A baseball card was worth $40 in 2000. It is worth 40 percent more than that today. What is the dollar value of the baseball card today?

56.00

Precious metals, gems, and collectibles are considered low-risk investments that can offset the risk of owning stocks and bonds.

False

Real estate is one of most liquid investments you can make.

False

The primary advantage of investing in mutual funds is the ability to sell your shares without risk of loss.

False

Farm products (such as wheat, corn, and cattle) and metals (such as gold and silver) are called

. commodities.

In January, Frannie makes an initial mutual fund purchase of $1,500. Beginning in March, she makes an additional $100 purchase in the fund every other month. How much has Frannie invested over the course of the year?

2,000

Fred and John wish to purchase a duplex for $400,000. If they make a 20 percent down payment, what will be the amount of their mortgage?

320,000

A global fund is a mutual fund that invests in safe, liquid securities such as Treasury bills and bonds that mature in less than one year.

False

A property manager lives at the rental site, takes care of all repairs and maintenance, and collects the rent for the owner.

False

All mutual funds specialize in rather conservative investments such as bonds or money market securities.

False

A professionally managed group of investments bought using a pool of money from many investors is called a

Mutual Fund

A growth and income fund invests only in stocks.

True

Because the property is not owner-occupied, an investor may find banks reluctant to grant a mortgage to buy a house as rental property.

True

Investors in growth funds earn their return through capital gains rather than through dividends.

True

Mutual fund investors share in any profits made by the mutual fund.

True

Mutual funds make money by charging fees to their customers for the professional services provided.

True

Ownership interest in a piece of property is called equity.

True

The buyer of a futures contract is obligated to purchase stock or a commodity for a specified price on a specified future date.

True

Unlike stocks, mutual fund prices are not determined by what people are willing to pay for them.

True

Vacant land is usually considered a speculative investment.

True

Advantages of investing in mutual funds include all of the following except

a guaranteed rate of return

Which of the following is a sales charge paid when you sell an investment?

back-end load

A(n) _________ fund is a mutual fund that seeks both growth and income but invests in a mixture of stocks and bonds rather than in stocks alone.

balanced

_________gains come from the profits made when mutual fund managers sell some of the fund's securities for more than they paid for them.

capital

An investment in a pool of mortgages that have been purchased by a government agency is a

certificate of participation.

_______________ property is land and buildings that produce lease or rental income.

commercial

A decline in the value of property due to normal wear and tear is called _____________.

depreciation

A building with two separate living quarters is called a

duplex.

A(n) __________ fund is a mutual fund that purchases international stocks and bonds as well as U.S. securities.

global

A mutual fund whose investment goal is to buy stocks that will increase in value over time is a(n) __________ fund.

growth

Which of the following is the most risky investment?

growth fund

To reduce risk, you should choose a mutual fund company with all of the following characteristics except

it has been in business for a minimum of five years

If you buy a mutual fund through a broker, you will likely need to pay a sales fee, called a(n) __________

load

A loan to purchase real estate is called a(n) _________ or trust deed.

mortgage

Which of the following tells you the market price for a share of a mutual fund?

net asset value

The _________ is a legal document provided by a mutual fund company that offers securities or mutual funds for sale.

prospectus

When you invest in _____________ , you are buying land and any buildings on it.

real estate

What is the goal of an income fund?

to produce current income in the form of interest or dividends