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Exam 19: Personal Finances and Investments

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Question 91

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Pro-future, Inc. Sandy is a personal financial planner at Pro-future, Inc.Pro-future is a financial company that focuses on personal and business financing.When potential customers come to Sandy for financial advice, she first determines their investment goals in order to create a financial plan that fits their needs.Once she has created a suitable financial plan for a customer, Sandy gives her clients a pamphlet with suggestions for helping to accumulate the amount of money that they need. Advice about risk is given to all of Sandy's clients.Sandy also makes strategic financial plans for each of her customers, which helps them to track and achieve their financial goals. -Refer to Pro-future, Inc.What is a possible suggestion Sandy might give her clients in order to meet their retirement goals?

A) Finance your credit cards first.
B) Do not participate in 401(k) or 403(b) programmes.
C) Take advantage of any employer-sponsored retirement plans.
D) Allocate enough money to meet all of your needs.
E) Invest 30 percent of your monthly earnings for retirement.

F) D) and E)
G) None of the above

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Question 92

Multiple Choice

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Many investors like mutual funds because they provide instant

A) diversification.
B) profitability.
C) financial returns.
D) access.
E) fee reductions.

F) A) and D)
G) C) and D)

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Question 93

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Personal Accents, Inc.(PAI) Personal Accents, Inc., (PAI) is a publicly-held company that specialises in selling a variety of skin- and hair-care products.The company owns specialty stores that appeal to both men and women.Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's. Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment.Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything.Fearing the potential loss of money in high-risk investments, she has invested in PAI.She feels that the company is established and has maintained stable profits over the years.She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively. -Refer to Personal Accents, Inc.Charlotte recently chose an account executive for her investment and financial needs.Which of the following best describes an account executive?

Kaitlyn purchases a €1,000 corporate bond with a fixed interest rate of 5 percent for €900.What is the most likely explanation for this apparent bargain?

The act enacted to improve corporate accountability and financial reporting is the

Today a regulatory pyramid consisting of ____ levels exists to make sure that investors are protected.

Martie Brown is now retired and asks for your help choosing an investment that will provide a steady source of income.In this situation, you recommend

The interest paid on bank accounts can be withdrawn to serve as income, or it can be left on deposit to provide growth.

The purpose of asset allocation is to

Since Mike and Carol are nearing retirement age, they are concerned with the need for their investments to provide income.If you were a financial planner, which of the following would you not recommend to Mike and Carol as an investment?

Personal Accents, Inc.(PAI) Personal Accents, Inc., (PAI) is a publicly-held company that specialises in selling a variety of skin- and hair-care products.The company owns specialty stores that appeal to both men and women.Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's. Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment.Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything.Fearing the potential loss of money in high-risk investments, she has invested in PAI.She feels that the company is established and has maintained stable profits over the years.She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively. -Refer to Personal Accents, Inc.If Charlotte wants to buy more PAI stock and puts in a request to purchase it at the current market price, this would be called a ____ order.

Mary Lou asks for your help.She must prepare a personal balance sheet for a class assignment.You tell her that a personal balance sheet simply lists her income and expenses for a specified period of time.

Personal Accents, Inc.(PAI) Personal Accents, Inc., (PAI) is a publicly-held company that specialises in selling a variety of skin- and hair-care products.The company owns specialty stores that appeal to both men and women.Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's. Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment.Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything.Fearing the potential loss of money in high-risk investments, she has invested in PAI.She feels that the company is established and has maintained stable profits over the years.She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively. -Refer to Personal Accents, Inc.Which of these would be considered a high-risk investment for Charlotte as a PAI investor?

Which of the following is not a suggested tip for making investment decisions?

Investors pay a contingent deferred sales fee every time they purchase shares in a mutual fund.

Which of the following is true about the differences between no-load mutual funds and load mutual funds?

Barron's is published

Which of the following statements is false?

Over a period of time, security averages indicate trends, but they do not predict the performance of individual investments.

The type of stock that may be exchanged for ordinary share is ____ stock.