Fina 1307 Ch 10-16

Checks are usually not honored at a bank when they are _____ months old or older. Checks are honored no matter how old they are 3 12 9 6

6

In investing, just like the rest of your financial life, goals are important. True False

True

Preffered stockholder do not having voting rights in the company. True False

True

The higher the interest rate on the bond, the riskier the bond will be as an investment. True False

True

The majority of corporations can call in thier bonds at any time. False True

True

The way you allocate investments is often more important than the companies you invest in. True False

True

The interest on federal securities is generally paid ________ times a year. twelve Twice Twenty Four three Once

Twice

you can only purchase bonds from a government organization. True False

False

Treasury Bonds, Bills, and Notes are issued in increments of $1000 $100 $1 $10 No set amount

$100

A way to avoid fees at ATMs is to: 3.Use ATMs that are closest in proximity to you All of the above 1.Use your own banks ATMs as often as possible 2.Take out larger sums of cash at a time Both 1 and 2

1.Use your own banks ATMs as often as possible 2.Take out larger sums of cash at a time Both 1 and 2

Roughly ____ of all American households are underbanked and ____ are unbanked. 5%, 1/8 25%; 10% 1/5, 8% 1/8; 5% 8%; 1/5

1/5, 8%

which bond would be considered investment grade? AAA C BB CC D

AAA

A(n) __________ charges for each check written, has no minimum balance. Non-interest earning account Regular checking account Interest-earning account Activity account None of these

Activity account

Before you begin investing you should: Have a solid budget Contribute to any available retirement plans All of the above Have a rainy day fund Pay off debt, especially high interest debt

All of the above

Corporations sell bonds to: Interest dispersed to bondholders is tax deductible for the corporation To fund business activities including major purchases and projects All of the above To increase financial leverage When they find it difficult or impossible to sell stock

All of the above

Dividends: Can be cash Are usually given every three months Can be company products Can be stock All of the above

All of the above

I want to invest so I can retire What is the goal lacking? How much you will contribute to investing Goal amount Time frame Type of investments you will persue All of the above

All of the above

Life insurance companies offer services for: Investments Life insurance Retirement planning Life insurance & credit cards All of the above

All of the above

Stocks are: All of the above Pieces of ownership in a company The cornerstone of most portfolios Riskier than many other investments A growth investment

All of the above

What is an advantage of a bond? Very Safe Investment All of the above Good to invest in during economic downturns Bond holders are paid back before stock holders Diversifies your investments

All of the above

Disadvantages of debit cards include: The possibility that your card could be lost or stolen All of these The possibility of fraud Overdraft charges

All of these

What are some investment risks? Business Failure Risk All of these Market Risk Inflation Risk Interest Rate Risk

All of these

Electronic payment types include all of the following except for: Debit cards Smart cards Online payments Gift cards All of these are electronic payment methods

All of these are electronic payment methods

shows the total interest which an investor should expect to receive. Annual percentage yield (APY) Inflation Liquidity None of these Compounding

Annual percentage yield (APY)

You should begin investing and saving: In your 50's As early as possible In your 30's It doesnt matter when you start investing In your 40's

As early as possible

The process of putting your eggs into a number of carefully selected baskets is known as: None of the above Speculating liquidity Asset allocation Time value of money

Asset allocation

The face value of the bond is paid back Every bond is different Every Six Months At the beginning of the issue At the Maturity date Half way through the life of the bond

At the Maturity date

All of the following except for ___________ are financial businesses you should be wary of. All of the above Banks Pawnshops Rent to own centers Payday loans

Banks

A __________ is a personal check with guaranteed payment. None of these Certified check Money order Cashier's check Traveler's check

Certified check

Which bond would generally pay the highest interest? BB AAA CCC A AA

CCC

If Sam wants to invest in a CD that would definitely be available until the maturity date she should not purchase a ___________ CD. Bump-up Callable Promotional Stock-indexed None of these

Callable

are used by those who do not have bank accounts to cash checks and perform other banking duties. Check cashing establishments None of the above Pawnshops Rent to own centers Payday loans

Check cashing establishments

A deposit institution which is organized and run like corporations and offers many financial services such as checking, lending, and saving is referred to as: Credit-unions Savings and loan associations Commercial banks None of the above. Mutual savings banks

Commercial banks

__________ is earning interest on interest. Annual percentage yield (APY) Compounding Inflation Liquidity None of these

Compounding

The first step in reconciling a checking account is to: Contrast the written checks with those reported paid on the statement Determine deposits that are not yet on the statement. Add any interest that was earned to your checkbook balance. None of these Subtract any fees, charges, or ATM withdrawals from the checkbook balance.

Contrast the written checks with those reported paid on the statement

The interest rate paid on a bond is known as a ____________ Principal Coupon Issuer Maturity Date Speculation

Coupon

Companies that make only short term retail lending as called: Credit card companies Financial supermarkets Finance companies Mortgage companies None of the above

Credit card companies

A deposit institution that is a user owned, nonprofit organization which generally offers lower fees and lower loan rate is referred to as: None of the above. Mutual savings banks Savings and loan associations Commercial banks Credit-unions

Credit-unions

________ stockholders recieve all missed dividends first Convertible preffered Cumulative preffered Convertible common Cumulative common Management

Cumulative preferred

The primary purpose of payment services also known as a checking account is: Borrow money in order to receive money to pay for your home. None of the above. Easily transfer money to others for your daily needs. Write checks to pay for expenses such as rent. Store your money for later use.

Easily transfer money to others for your daily needs.

_____ insures up to $100,000 per person per financial institution in accounts they cover such as credit unions. NCUA None of these FDIC CCIG

FDIC

Bonds are a completely safe investment. False True

False

Bonds are an ownership stake in a company. False True

False

Buying stock is purchasing the debt of a company. True False

False

It is best just to rely on your broker to track your investments and returns? True False

False

Many financial institutions now provide a complete package of services, often called a savings account. True False

False

Most people today retire with a large pension plan through their employer to fund retirement? True False

False

Social Security will provide enough for you to retire well on. False True

False

Stock always pay dividends. True False

False

Value investors are looking for reliable stock that pay dividends. True False

False

Companies that make both short and medium term loans are called: Credit card companies Financial supermarkets Finance companies Mortgage companies None of the above

Finance companies

Companies that offer a wide range of financial services such as banking, stock brokerage, insurance and real-estate brokerage are known as: Financial supermarkets Mortgage companies Credit card companies None of the above Finance companies

Financial supermarkets

______________ ______________ refers to the quick accessibility of cash without a significant loss in value. Annual percentage yield (APY) Liquidity Rate of return or yield Inflation None of these

Liquidity

Generally as ___________ increases interest rates tend to increase as well. Inflation Rate of return None of these Compounding Annual percentage yield (APY)

Inflation

Will has an account in which the service charges often exceed the interest he earns on in each month. He likely has a(n) _____________ account. Interest-Earning checking None of the these Bonds Certificates of deposit Money market

Interest-Earning checking

Bonds returns have a/an _____ relationship with interest rates. Synergistic Beneficial risky Inverse Direct

Inverse

Government bonds fund national debt and the cost of running the government. False True

True

Rate of return is often in a trade-off relationship with _____________. Liquidity Inflation None of these Safety APY

Liquidity

Investing is: The key to building long term wealth A get rich quick scheme Becoming less and less necessary All of the above Gambling

The key to building long term wealth

A/An _________ should invest more heavily in bonds. Younger Person None of the Above Older Person Young Parent Career Investor

Older Person

An account that is insured by the FDIC, has a minimum balance, and who has floating interest rates that are based off the market are referred to as ______________. Money market accounts None of these CD's Saving bonds Interest-earning checking accounts

Money market accounts

A ________ acts as cash and is obtained from a financial institution, or store where you pay a small fee to obtain it. Traveler's check Money order None of these Certified check Cashier's check

Money order

Bank reconciliations should be performed every ___________. 6 months Month None of these Year Three months

Month

The interest earned from ______ bonds is exempt from federal taxes.

Municipal bonds

A deposit institution which is specialized in savings and mortgages and owned by the depositor is referred to as: None of the above. Commercial banks Credit-unions Savings and loan associations Mutual savings banks

Mutual savings banks

In the assigned reading on compounding, who has the better investment strategy? Pam or Sam? Pam Sam

Pam

_ are often used to obtain quick cash loans based on putting up your own personal property. Check cashing establishments Payday loans Pawnshops None of the above Rent to own centers

Pawnshops

are typically used by low income workers trapped in misfortune. A normal fee is $15 per $100. Rent to own centers Payday loans Pawnshops Check cashing establishments None of the above

Payday loans

Dividends are: The interest paid back on a bond Profits of a company paid back to the shareholders The profit from selling stock The credit rating of the company issuing a stock The way stocks can rise and fall dramatically

Profits of a company paid back to the shareholders

If John purchased a CD and received a free watch he purchased a _____________ CD. Callable None of these Stock-indexed Promotional Bump-up

Promotional

should always be higher than inflation or you essentially lose money. Rate of return Compounding Annual percentage yield (APY) None of these Liquidity

Rate of return

The percentage increase in value as a result of interest is known as: Rate of return or yield None of these Inflation Annual percentage yield (APY) Taxes

Rate of return or yield

Using __________ as a means of purchasing items such as furniture and TVs etc. can potentially double or triple the actual price of the item. Payday loans Check cashing establishments Pawnshops Rent to own centers None of the above

Rent to own centers

Common stock often yields greater returns and risks than almost any other investment. False True

True

When investing, your job includes all but the following? Keep track of your investments Keep records Seek professional guidance. Research different investment options Research and document investments, but there is no need to track the results once you have made your decision

Research and document investments, but there is no need to track the results once you have made your decision

Which of these is considered the safest investment? Real Estate Futures Junk Bonds Savings Bonds Mutual Funds

Savings Bonds

A _____________ has a fixed interest rate that is compounded twice a year, is exempt from state and local taxes and can have an expiration time of up to 30 years. Series HH bonds I bonds Series EE bonds P Bonds None of these

Series EE bonds

The primary purpose of a savings account is to: Easily transfer money to others for your daily needs. Store your money for later use. Borrow money in order to receive money to pay for your home. Write checks to pay for expenses such as rent. None of the above.

Store your money for later use.

Compounding interest produces more income if you reinvest and over a longer period of time? False True

True

The federal government securities with the longest maturities are: T-Bonds Federal Agency Debt Issues T-Bills T-Notes TIPS

T-Bonds

The federal government security that pays the highest interest rates is: T-Notes T-Bills T-Bonds Municipal Bonds Corporate Bonds

T-Bonds

__________ reduce the interest earned on saving therefore tax exempt and deferred saving plans are preferred as they increase your real rate of return. Compounding Rate of return None of these Taxes Inflation

Taxes

Volatility is The percentage of stocks in your portfolio The up and down swing of the value of a stock Profits from a company paid back to its shareholders When a company first issues stock The required return on a stock

The up and down swing of the value of a stock

All of the following is true about CD's except: They usually yield higher earning than a regular savings account They are fairly safe They require a minimum balance They don't require a minimum balance All of these are correct

They don't require a minimum balance

All of the following is true about CD's except: All of the above are correct They are fairly safe They usually yield higher earning than a regular savings account They require a minimum balance They don't require a minimum balance

They don't require a minimum balance

A benefit of preffered stock is: They usually come with an indefinite fixed dividend They will be paid back before common stock holders in the event of bankruptcy Voting rights They will be paid back before common stock holders in the event of bankruptcy and come with an indefinite fixed dividend. Higher returns than common stock

They will be paid back before common stock holders in the event of bankruptcy and come with an indefinite fixed dividend.

Younger investors should have a portfolio heavy in stocks because: All investors should have portfolios have in stocks Younger people have time to recover from an economic downturn They are more fun and risky They usually yield higher returns They yield higher returns and younger people have time to recover from economic downturn

They yield higher returns and younger people have time to recover from economic downturn

A common rule is that you should invest 110 minus your age in faster growing investments (Stocks). True False

True

Age has a huge impact on the way a person invests. True False

True

An agressive portfolio will invest heavily in stocks. False True

True

Bonds are a kind of a loan. False True

True

Bonds may not always keep up with inflation. True False

True

when opening an account with a financial institution it is important to ask all of the following except: How much is this institution going to charge me for their services? Would borrowing from this institution be a good idea? Is the institution convenient to use? You should ask all of these How much return will I get on my savings?

You should ask all of these

Investment growth refers to being able to sell an investment quickly without affecting its value income from interest payments, dividends, capital gains an investment increasing in value a certain type of mutual fund none of these

an investment increasing in value

Investment liquidity refers to none of these being able to sell an investment quickly without affecting its value an investment increasing in value a certain type of mutual fund income from interest payments, dividends, capital gains

being able to sell an investment quickly without affecting its value

Investment income refers to: an investment increasing in value being able to sell an investment quickly without affecting its value income from interest payments, dividends, capital gains none of these a certain type of mutual fund

income from interest payments, dividends, capital gains

Common Stock: is debt issued by a company is ownership in a company and has voting right. is ownership in a company has guranteed dividends has voting rights

is ownership in a company and has voting right.

All of the following are disadvantages of online banking except that they: Make it more difficult to deposit cash and checks Provide easy access to funds making you more likely to overspend it can be harder to pay bills and transfer funds. Create privacy and security concerns by handling so many affairs online Sometimes do not offer reimbursement for ATM usage

it can be harder to pay bills and transfer funds.