Refer to Figure 4-1. Approximately how much will Tony and Liz save in taxes as a
result of their IRA contributions?
a.$150
b.$450
c.$1,000
d.$3,000
You put your money into a 0.05 percent savings account. After two years you take your
money out of the account, only to find that your purchasing power has decreased. This
is an example of ____ risk.
a.inflation
b.deflation
c.interest rate
d.marketability
Interest is the price of money.
a.True
b.False
The PEG ratio adjusts the P/E ratio to allow for the fact that a company may be
experiencing rapid growth.
a.True
b.False
A security has an expected return less than its required return. This security is
A.selling at a premium to par.
B.selling at a discount to par.
C.selling for more than its PV.
D.selling for less than its PV.
E.a zero coupon bond.
Compute the net asset value for a share of a mutual fund with the following
characteristics:
a.$23.66
b.$22.76
c.$26.07
d.$24.41
Checking account statements provide a source of information for the value of
a.assets.
b.liabilities.
c.investments.
d.expenditures.
Refer to Figure 3-1. Calculate Maria and John’s current net worth.
a.$26,325
b.$25,025
c.$23,825
d.$16,325
Which of the following HO forms is especially written renters?
a.HO-3
b.HO-4
c.HO-6
d.HO-8
A speculator may write a put option on stock with an exercise price of $15 and earn a
$3 premium only if he thought
A.the stock price would stay above $12.
B.the stock volatility would increase.
C.the stock price would fall below $18.
D.the stock price would stay above $15.
E.the stock price would rise above $18 or fall below $12.
Long-term care insurance policies can be written to cover in-home care.
a.True
b.False
Joel Barber purchased a $1,000 bond for $985. The coupon rate of interest is 8.5
percent, and the bond matures in 10 years. What is Joel’s current yield on this bond?Joel
Barber purchased a $1,000 bond for $985. The coupon rate of interest is 8.5 percent,
and the bond matures in 10 years. What is Joel’s current yield on this bond?
a.9.85 percent
b.8.73 percent
c.8.50 percent
d.8.63 percent