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Exam 20: A: Understanding Personal Finances and Investments

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Question 51

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On January 1, 2012, Brad came up with an investment goal of having $50,000 in assets by March 31, 2012. What fault would financial planners find with Brad's goal?

A) This goal is not specific enough.
B) This goal cannot be easily measured to determine if it has been achieved.
C) This goal is overly specific.
D) This goal is not future-oriented enough.
E) This goal is unreasonable because of uncertain economic conditions.

F) A) and D)
G) B) and E)

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Question 52

Multiple Choice

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The act that is sometimes referred to as the Truth in Securities Act is the

A) Federal Securities Act of 1964.
B) Maloney Act of 1938.
C) Securities Act of 1933.
D) Securities Exchange Act of 1934.
E) Investment Company Act of 1940.

F) B) and C)
G) C) and E)

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Question 53

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Personal Accents, Inc. (PAI) Personal Accents, Inc., (PAI) is a publicly-held company that specializes 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?

An investor who is trying to make a large return on his or her investment in a short time span would most likely be engaged in

Which of the following statements is false?

Lydia is interested in purchasing shares of a new energy company. She contracts her account executive who gives her advice about when to buy this stock and sends her a Mergent Investor Service report on the company. This account executive is most likely a(n)

Depending on the year, ____ funds have outperformed managed funds.

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

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

Personal Accents, Inc. (PAI) Personal Accents, Inc., (PAI) is a publicly-held company that specializes 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.

High-risk investment techniques include all of the following except

The practice of board members, corporate management, and employees buying and selling a corporation's stock is

To get the proper financial counseling, Marquis and Marta Jacobs made an appointment with Harry Hanstein. Harry has had two years of training in securities, insurance, taxation, retirement planning, and estate planning and has passed a rigorous qualifying examination given by the Certified Financial Planner Board of Standards in Denver. Harry is a

Orlando Esperanza, president of Connell Corporation, requested that fifty shares of his Hewlett-Packard stock be sold at a price equal to or better than $30. Orlando placed a(n) ____ order with his broker.

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?

A bond issued by a state or local government is called a(n)

Sira Barker has a monthly income of $2,800. Her monthly expenses total $2,200. Based on this information, she has

Tiffany Nelson puts her money in a single investment that is made up of many different investments and is managed by a team of professionals. Tiffany invested in

What is your personal role in the investment process? How will taking a responsible role in investing serve your best interest?

Kenneth calls his broker and asks him to sell 1,000 shares of IBM stock. The broker executes his client's order without making any suggestions or recommendations. This broker is most likely a