Financial Planning Study Guide 3.04

Mutual funds that contain both stocks and bonds are known as

Balanced funds

Which of the following is not a benefit of investing in bonds:

Bringing you high returns

Which type of stock comes with voting rights?

Common

Which of the following is not a loan to a governing body:

Corporate bond

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

Which of the following is the best place to buy shares in a mutual fund:

Fidelity Investments

Which of the following is considered a reliable bond:

Government

Which of the following best describes the relationship between bonds and the stock market:

Inverse

Commission fees associated with mutual funds are known as

Loads

Which of the following best describes a marketable bond:

One that is bought and sold in the open market

Which of the following is not an important variable of a bond fund:

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

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:

The fund's prospectus

Which of the following is not a reason that companies issue stock:

To gain respect

Which type of stock is considered a "bargain"?

Value

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.

what are the 3 standard types of financial statements?

balance sheets, income statements, and cash flow statements.

When Janine wants to know what others are willing to pay for a bond she owns, she looks at the

bid price.

Darron is investigating a few corporate bonds for investment. He wants to know how likely it is that the corporations will pay back what they've borrowed. Darron needs to look at the

bond rating.

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

capital appreciation

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

coupon

Because stocks in pharmaceutical companies hold their value regardless of the state of the economy, they are known as __________ stocks.

defensive

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

dividends.

"Spiders" and "cubes" are types of

exchange-traded funds

Melinda wants to invest in a bond, but her main concern is how soon she'll be able to access the money she's invested. Melinda needs to look at the

liquidity

The price of a mutual fund's shares is determined by

net asset value.

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)

open-end fund.

A stock with a price of $1 or less is known as a __________ stock.

penny

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

secondary market. (aka stock market)

To get a general idea of the direction of the stock market today, check a

stock market index.

A fund that invests in stocks that tend to be undervalued or overlooked is called a

value fund.

What a bond brings you over a period of time at a particular price is called the bond's

yield.