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Federal income taxes on annual earnings from mutual funds can be avoided
a.systemic risk.
b.pure risk.
c.market risk.
d.random risk.
There are approximately ____ open-end mutual funds in the United States.
a.2,800
b.3,678
c.8,100
d.13,000
Compare the cost of the following leasing agreement with the finance charge on a loan
for the same time period. The price of the car is $14,000, and its projected residual
value at the end of four years is $3,000.
Other things being equal, one would want to finance this car rather than take this lease
if the finance cost were less than
a.$200.
b.$1,550.
c.$2,200.
d.$2,450.
The amount you pay to purchase a health care plan is called the deductible.
a.True
b.False
Which property goes through a court-supervised transfer of a decedent's assets typically
as outlined in a will?
a.The probate assets
b.Assets transferred by contract
c.Assets transferred by operation of law
d.Life insurance proceeds
An investor starts with $1 million and converts it to 0.75 million pounds, which is then
invested for one year. In a year the investor has 0.7795 million pounds, which she then
converts to dollars at an exchange rate of 0.72 pounds per dollar. The U.S. dollar annual
rate of return earned was _____.
A.4.97 percent
B.5.27 percent
C.6.45 percent
D.7.69 percent
E.8.26 percent
A corporate bond returns 12 percent of its cost (in PV terms) in the first year, 11 percent
in the second year, 10 percent in the third year and the remainder in the fourth year.
What is the bond's duration in years?
3.32 = (12% * 1) + (11% * 2) + (10% * 3) + (67% * 4)
A.3.68 years
B.2.50 years
C.4.00 years
D.3.75 years
E.3.32 years
Refer to Figure 12-1. Trina enjoys managing investments and believes that she could
get a higher yield on the proceeds from Antonio's life insurance than the insurance
company would pay. Which settlement option should be selected for Antonio's policy in
the event of his death? a. Interest income
b. Lump sum
c. Income for a specific period
d. Income for life
Classify each of the following in terms of their effect on interest rates (increase or
decrease):
I. Perceived risk of financial securities increases.
II. Near term spending needs decrease.
III. Future profitability of real investments increases.
A.I increases, II increases, III increases
B.I increases, II decreases, III decreases
C.I decreases, II increases, III increases
D.I decreases, II decreases, III decreases
E.None of the options
Effective financial goals should be stated explicitly in terms of purpose, dollar amounts,
and projected date for achievement.
a.True
b.False
