Wealth Management final
Commission fees associated with mutual funds are known as A.NAVs. B.loads. C.ETFs. D.expense ratios.
B Loads. Commission fees associated with mutual funds are known as loads. NAV, or net asset value, is the way to determine the price of a mutual fund's shares. ETFs are exchange-traded funds, "cousins" of mutual funds that trade like individual stocks. A fund's expense ratio is the percentage of assets used to pay for expenses.
A mutual fund that has no limit on the number of shares it can issue or the amount of money it can hold is called a(n) A.growth fund. B.open-end fund. C.stock fund. D.closed-end fund.
B Open-end fund. A mutual fund that has no limit on the number of shares it can issue or the amount of money it can hold is called an open-end fund. A closed-end fund is a mutual fund that can only issue a set number of shares, determined before the fund is ever established. A stock fund is a fund that invests only in stocks. A growth fund is a fund that invests in stocks that are most likely to appreciate in value over the short-term.
An amount of money borrowed by an individual or a business simply by signing a promissory note is obtaining a(n) A.secured loan. B.regular credit account. C.unsecured loan. D.travel and entertainment card.
C Unsecured loan. To obtain an unsecured loan, the borrower does not pledge anything s/he owns as security to guarantee that the loan will be repaid. Instead, the borrower signs a written promise to repay the loan. Secured loans require borrowers to guarantee repayment by pledging collateral. Regular credit accounts and travel and entertainment cards are used to purchase goods and services rather than to borrow money. In addition, these credit users agree to the terms for payment, credit limits, and interest as specified by the credit provider.
Mutual funds that contain both stocks and bonds are known as A.exchange-traded funds. B.index funds. C.money market funds. D.balanced funds.
99.D Balanced funds. Mutual funds that contain both stocks and bonds are known as balanced funds. Exchange-traded funds are "cousins" of mutual funds that trade like individual stocks. Money market funds invest in a variety of different securities that provide relatively higher rates of return over the short-term. Index funds are a unique type of stock mutual fund that copy the performance of a particular stock market index, such as the Standard and Poor's 500 (S&P 500) or the Nasdaq 100.
What can you do to cope with volatile financial markets? A.Diversify your investments. B.Invest in a single, quality stock. C.Invest in dividend-paying stocks. D.Maximize the amount of money put into savings.
A Diversify your investments. When you diversify your investments, you keep from putting "all of your eggs in one basket." This helps to overcome the weaknesses in one type of investment with the strengths in another type of investment. Investing in one, quality stock exposes your investment to risk that diversification would not encounter. Investing in dividend-paying stocks is a wise choice when income is needed from investments. Otherwise, it's better to invest in growth stocks. Maximizing the amount of money put into savings often will not keep pace with the rate of inflation, thereby keeping you from being able to cope with financial market volatility.
What type of loan requires collateral? A.Secured B.Unsecured C.Note D.Signature
A Secured. A secured loan is a loan in which the borrower pledges to the lender some valuable possession as security, or collateral, to guarantee that the loan will be repaid. Items often used as collateral include real estate, stocks, bonds, machinery, and the cash value of life insurance. An unsecured loan, also known as a signature loan, is an amount of money borrowed by an individual or a business simply by signing a promissory note to repay the loan. No collateral is required for this loan. Both secured and unsecured loans are considered notes.
The price of a mutual fund's shares is determined by A.investment portfolio value. B.net asset value. C.liabilities. D.outstanding shares.
B Net asset value. The price of a mutual fund's shares is determined by net asset value. Investment portfolio value, liabilities, and outstanding shares are all factors used to determine net asset value. To determine net asset value, you take the total value of a fund's investment portfolio, minus its liabilities (debts or obligations), divided by the number of its outstanding shares (the number of shares the fund has issued). The answer to the equation is the price of the shares in the fund.
A fund that invests in stocks that tend to be undervalued or overlooked is called a A.blend fund. B.growth fund. C.value fund. D.sector fund.
C Value fund. A fund that invests in stocks that tend to be undervalued or overlooked is called a value fund. Value fund managers choose stocks they think will appreciate in value over the long-term. A growth fund is a fund that invests in stocks that are most likely to appreciate in value over the short-term. A blend fund is a stock fund that contains both growth and value stocks. A sector fund is a fund that invests in stocks from one specific industry, such as oil.
What is the best long-term investment for coping with volatile financial markets? A.Certificates of deposit B.Bonds C.Treasury bills D.Stocks
D Stocks. Volatile financial markets are best addressed with stock investments because the rate of return on stocks, in the long term, have historically been better than the returns on bonds and treasury bills. Certificates of deposit are savings instruments rather than investments. The rate of return on CD's is stable but lower than that of the return on stocks.
