Finance 101 LQ's T/F
A lower expected return will mean a higher risk will have to be accepted.
False
A sale of 450 shares of stock would involve the trade of an odd lot.
False
American investors who want to have a diversified portfolio should invest only in American companies.
False
Capital appreciation of an investment is a form of Current Income.
False
Children can stay on their parents insurance plans until age 30 under the Affordable Care Act.
False
Common stock generally allows the stockholder to vote on issues of corporate governance.
False
Financial planning is necessary only if you earn a lot of money.
False
Generally, collateral for an installment loan may be seized and liquidated by the lender if the borrower has paid the loan in full.
False
Minors can handle large sums of money and property.
False
Mutual funds often sell directly to investors.
False
Paying only the minimum payment each time on a credit card usually enables one to pay off the balance fairly quickly.
False
President Obama was the first president to attempt to reform the health care and insurance industries.
False
The Federal personal income tax is a flat tax.
False
The balance sheet equation is assets plus liabilities equals net worth.
False
The life insurance needs of beneficiaries are secondary since most proceeds are paid to living policy holders.
False
When buying a car from a dealer let them know exactly how you feel about the car.
False
When comparing two installment loans with the same principal and APR, the loan with the shorter maturity will have the lower monthly payment and the lower total costs.
False
A balance sheet shows your financial condition as of the time the statement is prepared.
True
A budget is a detailed financial forecast.
True
A limit order may be used either to buy or to sell.
True
A retail stockbroker buys and sells securities on behalf of clients.
True
A round lot consists of multiples of 100 shares of stock.
True
A taxpayer can write off a maximum of $3,000 of capital losses in one tax year.
True
All categories of common stock are voting.
True
All securities involve risk of some kind.
True
Brokers charge a commission on a security purchases as well as on security sales.
True
Compound interest is a very important concept when evaluating the return on an investment you plan to hold for a long time.
True
Credit report is routinely used to predict credit worthiness.
True
Credit should not consistently be used for non-durable goods.
True
Event risk occurs when something substantial happens to a company that has an immediate impact on its financial condition.
True
Group health insurance premiums are usually lower than individual health insurance premiums.
True
If the current price of an investment increases, the investment's annual yield will decrease.
True
Inflation risk is lower for short-term investments than long-term investments.
True
Intestacy results from dying without a valid will.
True
Investing and speculating are two entirely different activities.
True
Life insurance needs change dramatically over one's lifetime.
True
Liquidity is important in an estate to pay for death costs and possible taxes.
True
More damage is done to estates by doing nothing than by doing the wrong thing.
True
Mutual funds provide professional management and diversification that individual investors - especially those with limited resources - can rarely obtain on their own.
True
One can be overusing credit even though he can afford to make minimum monthly payments on time.
True
Recovery of principal and capital gain are elements of total return.
True
The capital market is the marketplace for long-term securities.
True
The proposed insurance marketplaces and exchanges would allow a customer to compare available insurance plans in their area.
True
The purpose of a credit report is to evaluate the kind of risk you pose to the lender.
True
The right of the policyholder to the cash value of a whole life policy is a non forfeiture right.
True
The risk free rate of return is often measure by the return on US Treasury Bills.
True
Under the Affordable Car Act, an insurance company cannot rescind a customer's policy unless they can prove that the customer intentionally lied to obtain the policy.
True
When loaning money to a friend or family member, it is advisable to lend only the amount that you can afford to give away.
True
When simple interest is used, the stated rate of interest on single payment loans is equal to the annual percentage rate (APR).
True
Without using margin accounts, common stock holders cannot lose more than they initially invest in a common stock.
True
Your gross estate is all property subject to federal tax at your death.
True