Finance EC pt 2

A mutual _______ pools investors' money to invest in various securities.

Fund

Professional financial________ services provide detailed information on mutual funds and offer online research reports about mutual funds.

advisory

Funds categorized as ________growth funds seek rapid growth by purchasing stocks whose price is expected to increase dramatically in a short period of time.

aggressive

A _______could be a person or a bank that administers a trust.

trustee

For a mutual fund, the _______ ratio measures the percentage of a fund's holdings that have changed or been replaced during a 12-month period.

turnover

For a mutual fund, the turnover ratio measures the ______of a fund's holdings that have changed or been replaced during a _______-month period.

%,12

Intermediate bond funds usually invest bonds maturing in ______ to _______ years.

3-10

If you are born after 1928, you become eligible for Social Security retirement benefits if you have earned credits based on _________quarters of work and payment into the system through the Social Security tax.

40

Most index funds outperform managed funds because A) they have lower annual fees since they are not actively managed B) the index funds have better managers C) the indexes that the funds are tied to always go up D) the managed funds all have a front-end load

A

One tip for saving for retirement is to keep your money in your former employer's retirement plan once you leave a job, or you can: A) roll over the money into an IRA. B) cash out the money and invest it. C) use it to buy CDs.

A

When deciding to buy a mutual fund, the choice is: A) not easy because professional managers make mistakes. B) not easy because each fund has many managers. C) easy because the fund manager knows how much risk you are willing to take. D) easy because funds have professional managers.

A

When saving for retirement, which of the following is NOT a good advice? A) Saving early in small amounts is not as good as saving later in larger amounts. B) Using automatic deductions from your payroll account will help you save money. C) You should assume a fairly low rate of return on your investments if you want to be sure you will have enough for retirement. D) You shouldn't dip into retirement accounts unless it is absolutely necessary - this will help ensure you have enough for retirement.

A

Which of the following funds would most likely invest in high-risk (low quality) corporate bonds? A) High-yield bond funds B) Long-term government bond funds C) Long-term corporate bond funds D) World bond funds

A

Which of the following is not true? A) Young workers should likely choose mutual funds that can provide income and have less risk. B) Your choice of investments for a retirement plan should be based upon your age, years before you retire, and your attitude toward risk. C) You should participate in an employer sponsored retirement plan. D) You should choose mutual funds for your retirement plan that match your long-term goals.

A

Which of the following would offer federal tax-free interest income? A) Municipal bond funds B) Short-term U.S. government bond funds C) World bond funds D) High-yield bond funds

A

Multiple Select Question A) Mutual funds can be purchased: B) Multiple select question. C) through an account executive D) directly from the mutual fund company E) from the Securities and Exchange Commission

A, B

Select all that apply Which of the following are widely used subscription services that provide detailed mutual fund information? A) Value Line B) Morningstar, Inc. C) T. Rowe Price Corporation D) Lipper Analytical Services

A, B

Select all that apply There are many advantages to investing in mutual funds such as: A) diversification B) professional management C) switching privileges D) control of capital gains distributions E) guaranteed return

A, B, C

You can get a mutual fund prospectus by: A) requesting one by mail. B) calling a toll free number. C) requesting one from the Federal Reserve. D) reading your annual report. E) accessing the company's website.

A, B, D

Select all that apply The financial decisions related to housing as you try to maximize current income and prepare for retirement might include: A) considering a smaller house that is less costly to maintain than a larger home. B) purchasing a larger dream home in a warmer climate. C) selling your home and buying a smaller less expensive home.

A, C

Select all that apply The four types of wills are: A) stated amount wills B) joint tenants wills C) traditional marital share wills D) exemption trust wills E) simple wills

A, C, D, E

Select all that apply Which of the following are myths about retirement planning? A) There's plenty of time for me to start saving for retirement. B) You will spend more when you retire because of higher medical costs. C) Your pension benefits will increase to stay up with inflation. D) Medicare will cover all my medical expenses. E) I can depend on Social Security and pension plan to pay my living expenses.

A, C, D, E

A long-term corporate bond fund usually invests in: A) investment-grade corporate bonds maturing in five years or more. B) investment-grade corporate bonds maturing in more than 10 years. C) investment-grade corporate bonds maturing in 20 years or more. D) U.S. Treasury bonds maturing in 10 years or more.

B

Aggressive growth funds seek: A) long-term growth by purchasing stocks whose price is expected to increase during a three- to five-year time frame B) rapid growth by purchasing stocks whose price is expected to increase dramatically in a short period of time C) moderate growth by purchasing stocks whose price is expected to increase dramatically in a short period of time

B

People often select mutual funds for all of the following reasons except which one? A) They want a professional investment manager selecting their investments. B) They have plenty of money to diversify on their own. C) They lack the expertise to select stock on their own. D) They want a larger return than a savings account.

B

When shares are issued and redeemed by the investment company at the request of investors, the fund is: A) a closed-end fund B) an open-end fund C) an exchange-traded fund

B

Which of the following best defines a mutual fund? A) An investment club that meets and decides how to invest members' money. B) An investment company that pools investors' money to invest in various securities. C) A union of depositors that make their shares available for loans and investments. D) A mutual savings bank that takes in deposits and invests in government securities.

B

Which of the following is the best and most complete definition of estate planning? A) The plan for the administration and disposition of property only at death B) The plan for the administration and disposition of property during one's lifetime and at death C) The plan for the disposition of property during one's lifetime and at death D) The plan for the administration and disposition of property only during one's lifetime

B

Which type of trust allows the trustor to retain the right to end or change the terms of the trust? A) Irrevocable B) Revocable C) Credit-shelter D) Life insurance

B

Select all that apply Which funds are listed on an exchange or are traded in the over-the-counter market, making it possible to sell your shares to another investor? A) Open-end funds B) Closed-end funds C) Exchange-traded funds

B, C

Select all that apply Sources of retirement income usually include: A) gambling winnings B) public pension plans C) employer pension plans D) payments from annuities

B, C, D

Select all that apply Which of the following are typical types of mutual funds? A) Open exchange B) Closed-end C) Open-end D) Exchange-traded E) Closed-traded

B, C, D

If a will is handwritten, it is known a(n): A) statutory will. B) exemption will. C) holographic will. D) formal will.

C

Which of the following is NOT a document that will normally be needed at the time of death? A) Insurance policies B) Automobile registration C) Warranties on various property owned. D) Title to stock and bond certificates

C

Which of the following is NOT a source of information about mutual funds on the Internet? A) Web sites for mutual fund management companies B) Web sites for professional advisory services C) The Federal Reserve Web site D) General financial Web sites such as Yahoo finance

C

Which of the following is not an important document that may be needed at the time of your death? A) Marriage and divorce papers B) Birth and death certificates C) College diplomas D) Legal name change papers

C

Which of the following is not considered an alternative to living off your retirement income? A) Working part-time B) Dipping into your nest egg C) Traveling around the world

C

Which of the following is not considered an alternative to living off your retirement income? A) Working part-time B) Traveling around the world C) Dipping into your nest egg

C

Which of the following statements is true? A) Working during retirement is the last thing any retiree should want to do. B) Dipping into your nest egg during retirement is always wrong. C) You may need to decide between spending and saving during retirement. D) You should never consider your heirs when deciding whether to take money from savings during retirement.

C

Select all that apply Mutual fund information can be found in many magazines, such as: A) Newsweek B) Time C) Money D) Forbes E) Kiplinger's

C, D, E

An estate tax is: A) an income tax on a deceased person's income B) a tax on life insurance proceeds to a named beneficiary C) an inheritance tax paid by beneficiaries D) a tax collected on the value of property at the time of death

D

Which of the following expenses will probably be incurred during retirement? A) Commuting expenses B) Expenses for workplace clothing C) Pension contributions D) Medical expenses

D

Which of the following expenses will probably be incurred during retirement? A) Pension contributions B) Commuting expenses C) Expenses for workplace clothing D) Medical expenses

D

Which of the following is a document where you state whether you wish to be kept alive by artificial means if you become terminally ill? A) Simple will B) Stated amount will C) Exemption trust will D) Living will

D

Which of the following is not true concerning mutual funds? A) The Vanguard 500 Index fund was a pioneer in offering low-cost investing in funds. B) Almost 99.5 million individuals own mutual funds in the United States. C) The combined value of assets owned by investment companies in the United States totals $17.7 trillion. D) The number of mutual funds has decreased in recent years.

D

Which of the following is not true? A) The time value of money concept is important with 401(k) plans. B) You should participate in a 401(k) plan because it provides tax savings. C) You should participate in a 401(k) plan because many employers match contributions. D) Most 401(k) plans limit your investment choices to one or two mutual funds.

D

Which of the following is not a type of will? A) Simple will B) Exemption trust will C) Stated amount will D) Traditional marital share will E) Joint tenants will

E

A person must work 20 years to be eligible for Social Security retirement benefits. True or False

False

An individual retirement account (IRA) is an account where the employer deposits money for each individual employee. True or False

False

Jointly owned property passes directly to the surviving children and may be appropriate for some assets, such as a home. True or False

False

A(n) ________retirement account is a special account in which the person sets aside a portion of income for retirement.

Individual

A number of subscription services provide detailed information on mutual funds. True or False

True

An estate is everything you own. True or False

True

Despite the accusations of fraud and mutual fund scandals in the first part of the 21st century and poor fund performance during the 2008 crises and 2020 pandemic, mutual funds are still the investment of choice for many investors. True or False

True

Investors invest in closed-end funds, open-end funds, and exchange-traded funds to earn a financial return. True or False

True

The contributions and earnings of an employer-sponsored pension plan remain tax-deferred until you withdraw them. True or False

True

The purpose of investing in mutual funds is to earn a financial return. True or False

True

There is normally more than one way to purchase mutual funds. True or False

True

A(n) _________is a contract purchased from an insurance company that provides an income at regular intervals for a certain number of years or for life.

annuity

There are many ________- and ___________-oriented magazines such as Forbes and Money that serve as a good source of mutual fund information.

business, investment

The three general types of mutual funds are ________-end, _________-traded, and open-end funds.

closed,exchange

One of the major advantages of investing in mutual funds is _______because the fund manager is investing in many different stocks and/or bonds.

diversification

A will is the legal _________that specifies how you want your property to be_________ after your death.

document, divided

A pension plan is a retirement plan that is funded, at least in part, by a(n) _______.

employer

A federal tax collected on the value of a deceased person's property at the time of his or her death is called a(n)_________ tax.

estate

Fill in the Blank Question Fill in the blank question. A(n)_________ includes everything you own.

estate

When you retire, some living expenses may be reduced, such as work-related expenses, clothing, and ________ _________taxes.

federal,income

A(n)_________ is the creator of a trust.

grantor

A(n) ______will is one that is handwritten.

holographic

A(n) ________ will probably be your most valuable asset in retirement, so it is important to consider carefully what size of payments you can afford.

house

When the Standard & Poor's 500 index increases, index mutual funds that invest in these stocks __________

increase

An annuity is a contract that could provide retirement income for a set number of years or for ________

life

Estate planning involves the planning for the administration and disposition of property during one's _________and at death.

lifetime

A(n) ______will is a document in which you state whether you want to be kept alive by artificial means if you become terminally ill and unable to make such a decision.

living

Expenses that may increase as a result of retirement include recreation, health insurance, and ________care.

medical

People often buy_________ ___________ when they lack enough money to diversify their investments among several stocks.

mutual funds

The belief that you have plenty of time to start saving for retirement is a common _______about the retirement years.

myth

Jointly__________ property passes directly to the joint owner and may be appropriate for some , __________such as a home.

owned,assets

Sources of retirement income include public ______plans, employer pension plans, personal retirement plans, and ________.

pension,savings

Estate planning is the process of creating a detailed________ for _________your assets.

plan, managing

Investors often think they do not need to evaluate a mutual fund because each fund has a professional _________manager.

portfolio

A mutual fund company must provide a prospective investor with a_______ before an investment is made.

prospectus

Lifecycle funds are popular with investors planning for_________ by a specific date.

retirement

When selecting the proper lifecycle fund, the most important criterion is the target _________ date of the investor.

retirement

A _______trust is a trust whose terms the grantor retains the right to change.

revocable