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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. If Sandy were to create a personal budget for her clients, what would be her first step?


A) Estimate their expected amount of money to be allocated to their investments
B) Determine the amount of income needed to cover their expenses
C) Calculate their long-term debt
D) Estimate their income for a specific period
E) Estimate their expenses for a specific period

F) A) and B)
G) A) and C)

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Index funds are often referred to as


A) active funds.
B) passive funds.
C) deceptive funds.
D) socially responsible funds.
E) bad investments.

F) A) and B)
G) A) and C)

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Which of the following describes why exchange-traded funds have less need for a portfolio manager than closed-end funds?


A) ETFs normally invest in stocks, bonds, or securities within a specific index.
B) ETFs are actively managed.
C) ETFs have portfolio managers that actively select stocks and other securities on a regular basis.
D) ETF fees are generally higher.
E) ETFs usually hold investments in a minimum of three indexes.

F) None of the above
G) A) and B)

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The type of stock in which stockholders are assured that omitted dividends will be paid to them before other individuals will be paid is ____ stock.


A) common
B) convertible preferred
C) preferred
D) participating preferred
E) cumulative preferred

F) A) and E)
G) A) and C)

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Brian and Nancy both use the same brokerage firm. On the same day, Brian puts in a market order to buy 150 shares of Ford stock and Nancy requests to sell 150 shares of Ford stock. The brokerage firm completes this trade by taking the shares from Nancy and giving them to Brian. This exchange is not completed through a security exchange and is called a


A) security transaction.
B) full buy order.
C) short order.
D) market order.
E) matched order.

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

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Which of the following statements is true about retirement plans?


A) Only employers are able to contribute to 401(k) plans.
B) You must pay taxes on Roth IRA contributions.
C) All employers match some or all of an employee's contributions to a 401(k) plan.
D) Contributions to traditional IRAs are not tax-deductible.
E) Some nonprofit and government agencies offer 401(k) plans.

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

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Paul purchases a government bond for $1,000, and it matures in thirty years. Paul purchased a


A) Treasury bond.
B) savings bond.
C) Treasury bill.
D) Treasury note.
E) general obligation bond.

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

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Most investment counselors recommend that an individual establish an emergency fund equal to at least


A) one month's living expenses.
B) one month's gross salary.
C) two times the take-home salary.
D) three months' living expenses.
E) nine months' living expenses.

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

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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. Which of the following best describes a financial planner like Sandy?


A) A person who has had at least two years of training in investments, insurance, taxation, retirement planning, and estate planning and has passed a rigorous examination
B) A person who has passed a national but not state examination
C) A person who has had at least six months of training in investments, insurance, taxation, retirement planning, and estate planning
D) A person who has had at least five years of training in investments, insurance, taxation, retirement planning, and estate planning, and has graduated from high school
E) A person who has a college degree in planning

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

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Most brokerage firms have a minimum commission rate ranging from ___ for buying and selling stock through their company.


A) $1-$5
B) $2-$20
C) $7-$35
D) $25-$50
E) $35-$75

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

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Selling stock that an investor does not own and must replace later is called


A) speculating.
B) optioning.
C) selling short.
D) selling long.
E) spot trading.

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

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Investments can provide income, growth, and liquidity. Which factor is more important to you? Why?

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As an investor, all three factors - inco...

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Which of the following is not one of the types of bonds issued by the U.S. federal government?


A) Treasury notes
B) Savings bonds
C) Treasury municipals
D) Treasury bonds
E) Treasury bills

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

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The price of one share of stock at a particular time is known as


A) the par value.
B) a stock dividend.
C) the market value.
D) the current yield.
E) the current ratio.

F) C) and D)
G) All of the above

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Briefly describe the differences between closed-end funds, open-end funds, and exchange-traded funds.

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Closed-end funds, open-end funds, and ex...

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What is buying stock on margin? Why is it considered a high-risk investment?

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Buying stock on margin refers to the pra...

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Anne Martinez owns a convertible bond that allows her to convert her $1,000 bond to 50 shares of the corporation's common stock. What is the lowest stock price that would allow her to convert her bond to shares of common stock?


A) $10
B) $15
C) $20
D) $25
E) $30

F) B) and C)
G) A) and B)

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Which of the following is true about using the services of an account executive?


A) Goals should be clearly communicated to an account executive.
B) Account executives do not using churning practices.
C) Account executives are usually liable for client losses.
D) All account executives are full-service brokers.
E) A full service account executive does not provide research materials to clients.

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

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If you place a limit order to sell American Express stock at $56 per share, your broker's representative will


A) sell your stock if the price reaches $56 or more per share.
B) buy American Express stock when it reaches exactly $56 per share, and then resell it to you.
C) sell your stock at exactly $56 per share.
D) buy American Express when it goes below $56 per share.
E) sell your stock when the price goes below $56 per share.

F) B) and D)
G) All of the above

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Give at least three sources of information that investors could use to evaluate an investment. Why might investors want this information about an investment?

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1. Financial statements and annual repor...

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