Financial Planning 3.03-3.04

Which statement is true about assessing the fundamentals of a security

Even investment experts disagree about the most important ratios to consider in fundamental analysis

Which is a poor way to find companies in which to invest?

Follow suggestions in unsolicited e-mails and phone calls

Jamie owned 300 shares of stock in a certain company, worth $10 per share. Then, the company announced that his 300 shares would become 600 shares, worth $5 per share. This is an illustration of

a stock split

Mutual funds that contain both stocks and bonds are known as

balanced funds

Darron is investing a few corporate bonds for investment. He wants to know how likely is it the corporations will pay back what they've borrowed. Darron needs to look at the A) Liquidity B) Issuer C) Coupon rate D) Bond rating

bond rating

Robyn bought $100 worth of stock in a company, and the stock is now worth $150. This is an illustration of

capital appreciation

which type of stock comes with voting rights

common

Which type of bond does a company issue to raise financing for ongoing operations or expanding the business

corporate bond

Since John wants to know the bond's interest rate, he needs to look at the bond's

coupon

Too much diversification in a financial portfolio can

dilute the value of big gains on an individual stock

Teri decided to invest in a few different mutual funds rather than put all her investment dollars into one or two individual stocks. A stock in one of her mutual funds went bust, but since her money was spread out, Teri wasn't significantly affected. What advantage of mutual funds does Teri's situation illustrate?

diversification

A company that Marcus invested in has earned a profit, and now he is receiving a cash payment. This is an illustration of

dividends

ratios are calculated by

dividing one number by another

When Staci is told to "consider the cost" before selling an investment, she is being advised to:

estimate the effect of commissions and tax costs on her transactions

Return on equity (ROE) measures management's ability to make a profit

from the money that shareholders have invested

which is considered a reliable bond

government

The PEG ratio is unique because it incorporates price, earnings, and:

growth rate of earnings

The price-earnings (PE) ratio measures

investors' expectations about a company's performance.

A class of financial ratios that measures the ability of a company to turn available resources into cash and to pay its bills

liquidity ratios

which is a disadvantage of investing in bonds

low returns

Kent wants to learn as much as possible about the mutual fund he's thinking of investing in. Which of the following is the best place he could go for detailed information:

mutual fund prospectus

For assessing the value of a stock, which represents an invalid qualitative factor to consider?

offering more healthful foods

Which best describes a marketable bond

one that is bought and sold in the open market

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

when assessing a stock by using fundamental analysis, an investor should consider

qualitative and quantitative factors

A place where investors can trade securities that have been issued by a corporation is known as a

secondary market

Which is an appropriate investment objective for a mutual fund with a buy-and-hold approach

seeking long-term capital appreciation

which is the least important variable of a bond fund

the amount of time you spend researching the bonds in the fund

The most important factor to consider when choosing an investment is

whether the investment supports financial goals

A bond's profit or loss over a period of times at a particular amount is called the

yield