Money Matters May Final

The All-Star Basic Value Fund's portfolio is valued at $210 million. The fund has liabilities of $5 million, and the investment company sponsoring the fund has issued 16,400,000 shares. What is the fund's net asset value?

$12.50

At a 3 percent rate of inflation, approximately how many years will it take for prices to double?

24 years

What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $800?

8.75 percent

Which type of bond is not registered in the investor's name?

Bearer

Which of the following types of financial institutions provide Federal Deposit Insurance (FDIC) coverage?

Commercial banks, credit unions, and savings and loans

Sam Waterston has been making contributions into an individual retirement account to help pay for his children to go to college. Which type of account is he most likely using?

Coverdell Education Savings Account

Under what type of ownership is the property considered owned 50-50 for estate tax purposes and passed automatically to your spouse at your death?

Joint tenants with the right of survivorship

Francesca Brown has a life insurance policy that provides her with protection for the next five years. However, she can get 5 more years of protection at the end of the term without having to have a medical examination because she will be less than 70 years old at that time. Her premiums will rise during each five-year period. What type of term life insurance does Francesca likely have?

Renewable

Jeremiah Brown has been making contributions into an individual retirement account for his retirement. His contributions are not tax deductible but his earnings accumulate tax free. What type of individual retirement account does he have?

Roth IRA

An example of indirect real estate investment is:

a real estate investment trust (REIT)

Your bank statement shows a balance of $670. Your checkbook register shows a balance of $462. You earned interest of $2 and had a service charge of $4. There are no outstanding deposits. What is the amount of outstanding checks?

$210

Your annual income is $50,000. What is your life insurance need based on the easy method?

$245,000

A $1,000 corporate bond is convertible to 25 shares of the corporation's common stock. What is the minimum price that the stock must obtain before bondholders would consider converting the bond to stock?

$40

A $1,000 corporate bond pays 6.5 percent a year. What is the annual interest you will receive?

$65.00

Using the "nonworking" spouse method, what should be the life insurance need for a family whose youngest child is 10 years old?

$80,000

Up to how many days of skilled nursing care are covered by Medicare?

100

According to the 2012 Trustees Report, in what year is it projected that the funds available for paying Social Security benefits will be exhausted at current benefit and tax rates?

2033

The Affordable Health Act of 2010 requires new health plans to allow young people to remain on their parents' insurance policy until what age?

26

In a marriage that lasts more than 15 years, there's generally a (BLANK) split of the marital assets

50-50

What percent of Americans ages 65 to 74 are still in the workforce?

58

Martin Campbell wants to invest in mutual funds, but is also worried about diversification. Which fund would you recommend to him?

A fund of funds

In 2011, which country was the world's largest producer of gold?

China

Jane Calvert owns a condominium at the beach which she rents out to vacationers. What type of investment does she hold?

Direct investment in real estate

Which federal law sets minimum standards for pension plans in private industry and protects more than 50 million workers?

Employee Retirement Income Security Act

Which one of the following is not a recommended step individuals can use to weather a future financial crisis?

Establish a smaller than usual emergency fund

Jeff Willis has five kids and more debt than the average family. What method would probably be the best method for him to use to calculate his insurance needs?

Family need method

Which one of the following expenditures for retirees is most likely to increase?

Health Care

Which one of the following is not a provider of health insurance?

Health insurance industry association

Which statement is not true about a formal will?

It is usually prepared without an attorney's assistance.

Which of the following institutions is organized primarily to provide loans to purchase homes?

Mortgage company

Which one of the following statements is false?

Most individual investors that purchase Treasury bills, notes, and bonds bid competitively

Which one of these investments pools the funds of many investors and hires a professional money manager to manage those funds?

Mutual fund

Hospital insurance is which part of Medicare?

Part A

Neil Guest writes a check to pay for daycare for his son. What type of financial service is Neil using?

Payment service

James Fitzwater has crated a will that leaves exactly $2milion to his wife. What type of will has James created?

Stated dollar amount

Sam Waters just received $10,000 from his grandmother's estate. He has thought about buying himself a new Harley with the money but has decided instead to add the money to his mutual fund account. Which suggestion for obtaining the money he needs for investing is he following?

Taking advantage of gifts, inheritance, and other windfalls

Which one of the following statements is false?

To date, it is impossible to determine corporate earnings by using the internet.

Which of the following professional advisory services may charge a fee for you to access the more detailed information that may be needed to evaluate a stock investment?

Value Line and Morningstar

A closed end-fund is:

a fund whose shares are issued by an investment company only when the fund is organized

Stock dividends are determined by the:

board of directors

Garrett Jennings is thinking about buying an investment that represents the most basic form of business ownership and pays a dividend. The dividend on this investment is paid after all other payments and dividends have been made. Which investment is Garrett thinking about purchasing?

common stock

To calculate dividend yield, the annual dividend amount per share is divided by the (BLANK) per share.

current stock price

Contingent deferred sales loads generally:

decline gradually until there is no withdrawal fee

The quality rating given by Standard&Poor's to highly-speculative bond is:

default

Anthony Edwards wants to diversify his portfolio by adding a stock that maintains a stable value when the economy declines. What type of stock does Anthony want to add to his portfolio?

defensive stock

A surgeon who will soon finish paying off college loans might want to set up a(n):

disclaimer trust

Terry Hamilton has just received $30,000 from an uncle who died and is trying to decide how to invest it. She has done some research has decided that about 30% of the money should go into large cap stocks, 20% into medium cap stocks, 15% into small cap stocks, 10% into bonds, 10% into foreign stock, and 15% into cash. She thinks that even if one area does not do that well, the rest will so that her overall return will be pretty good. What aspect of investing is Terry most concerned?

diversification

Scott Cumbie believes he has a 'typical' family and wants to determine his life insurance need. What method would probably be the fastest method for him to use to calculate his insurance need?

easy method

Marcia Fuller has an insurance policy that lists that she and her three daughters, ages 6, 10, and 12, are covered under this policy. Which provision in her insurance policy is defined by this list?

eligibility

All the different fees and fund operating costs are often referred to as a(n)::

expense ratio

When one investment company manages a group of mutual funds, it is called a(n):

family of funds

A contract stating that the annuitant will receive a constant amount of income over a certain period or for life is called a:

fixed annuity

In general, the price of gold:

fluctuates daily

Which one of the following provides for the disposition of your assets and is usually prepared with an attorney's assistance?

formal will

Lynn Roy owns three, two-carat diamonds that she received from her grandmother who did not believe in banks or stocks and bonds. What type of investment does she hold?

gems

A prime reason for buying an annuity is to:

give you retirement income for the rest of your life

Louise Prescott is buying shares in a mutual fund that invests in companies expecting higher than average revenues and earnings growth. What type of mutual fund is she buying?

growth fund

More people have (BLANK) insurance than any other kind of health insurance.

hospital expense

Chris Jones has an insurance policy that pays benefits in cash when he is hospitalized. What type of insurance would this be?

hospital indemnity

What type of annuity is generally purchased by people of retirement age?

immediate annuity

All of the following statements are considered to be good advice for a potential investor starting an investment program except:

increase credit purchases to conserve cash

If overall interest rates in the economy fall, a corporate bond with a fixed interest rate will generally:

increase in value

Real property equity investments are usually considered attractive during times of:

inflation

Whe11: a corporation sells stock to the general public for the first time, it is referred to as a(n)

initial public offering

Standard & Poor's and Value Line are companies that would be examples of:

investors' services

Equity financing is a popular choice to provide long-term financing for a corporation because:

it does not have to be repaid

Which of the following is not a true statement about a holographic will?

it is always prepared by an attorneu.

The basic unit of gold bullion is one:

kilogram

If a bond is purchased at a price above the face value, the yield to maturity is:

less than the stated interest rate

Ashley Riley wants to buy the stock of XYZ Company at a specified price. What type of order should she place?

limit order

Which of the following features does not accurately describe a line of credit?

long-term loan

Which one of the following is a correct statement about the nation's health care system?

many Americans are unhappy with our health care system

Which of the following attributes would not be used by an Underwriter to determine the appropriate premiums to charge for insurance?

marital status

Sandra Peterson has been thinking about investing in corporate bonds. She is concerned about safety and wants the most secure bond investment possible. She would most likely invest in (BLANK) bonds.

mortgage

The value of a mutual fund's portfolio minus the mutual fund's liabilities, divided by the number of shares outstanding is called the:

net asset value

If you want a risk-proof real estate investment, invest in:

participation certificates (PCs)

To avoid high fees for loans, a person should avoid borrowing from a:

pawn shop

Which of the following institutions makes loans based on the value of tangibles possessions, such as jewelry and collectibles?

pawn shop

A mutual fund:

pools the money of many investors-its shareholders- to invest in a variety of securities

Jeremy Fischer has just purchased 20 American eagle gold coins from a broker. What type of investment does he hold?

precious metals

A documentary agreement between spouses before marriage in which one or both parties often waive a right to receive property under the other's will or under state law is called a:

prenuptial agreement

Which CD attempts to attract savers with gifts or special rates?

promotional

An investment company sponsoring a mutual fund must give potential investors a(n):

prospectus

An example of a direct real estate investment is a:

real estate dwelling

A limit on the amount you must keep on deposit in order to earn interest or avoid a service charge is am example of a(n):

restriction

Which one of the following investments offers the greatest liquidity?

savings account

An emergency fund should be deposited in a:

savings account at the highest available interest rate

Time deposits are another name for:

savings accounts

The 2001 CSO Table separates the mortality experiences by:

sex

When interest rates are rising, a person would be best served by:

short-term savings instruments

Matthew Miller has created a will and left everything to his wife Kate. What type of will has he created?

simple

Which will is sufficient for most smaller estates?

simple

Valerie Kilmer owns stock in the Williams Widget Company. She was just advised that in the near future she will be receiving two shares for every one share she owns today. What has the company declared that will cause this change to her shares?

stock split

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to both income and assets is called a:

subordinated debenture

You can determine your net worth by:

subtracting your liabilities from your assets

In what type of joint ownership may neither spouse sell the property without the consent of the other?

tenancy by the entirety

A (BLANK) is a financially independent firm that acts as the bondholder's representative.

trustee

The easy method of determining life insurance requirements assumes that your family is:

typical

If Widget Corp has a PEG value of .5, the stock is most likely:

undervalued based on its projected growth rate

Which type of risk affects only a specific company or a specific industry?

unsystematic