Question 1

Which of the following are considered to be speculative investments?

Accepted Answer

A)   BBB- rated corporate bonds
B)   Platinum
C)   Blue-chip stocks
D)   Baa3 rated preferred stockE) B) and C)
F) A) and B)

Question 2

Fine jewelry is considered a

Accepted Answer

A)   potentially high return market for investors.
B)   liquid form of investment.
C)   dependable investment.
D)   potentially high-risk investment.E) C) and D)
F) B) and C)

Question 3

Hiro Watanabe, a successful car dealer in Japan, is looking to invest in and manage shopping malls across California. Which of the following indirect real estate investment choices will Hiro be involved in?

Accepted Answer

A)   Limited partnership
B)   Mortgage-backed securities
C)   Real estate investment trusts
D)   Rental propertyE) A) and B)
F) B) and C)

Question 4

Gold is considered by many to be a hedge against political uncertainty and inflation. Which would not be a recommended method to hedge a stock portfolio with gold?

Accepted Answer

A)   Gold ETF
B)   Gold futures
C)   Gold mining stock
D)   Gold coinsE) C) and D)
F) None of the above

Question 5

A unit investment trust (UIT)  is an unmanaged pool of investments that is often composed of

Accepted Answer

A)   common stock.
B)   preferred stock.
C)   fixed-income securities.
D)   real estate investments.E) None of the above
F) A) and B)

Question 6

With hundreds of funds to choose from, you need to screen based on key characteristics. Which is not a key risk and return characteristic?

Accepted Answer

A)   Past performance
B)   Manager tenure
C)   Reinvestment of dividends
D)   Income or capital gainsE) B) and C)
F) A) and D)

Question 7

A mutual fund that is focused more on reducing investment risk by investing in both stocks and bonds is called a

Accepted Answer

A)   value fund.
B)   income fund.
C)   balanced fund.
D)   growth and income fund.E) A) and B)
F) C) and D)

Question 8

During times of strong economic growth, gold tends to ________ your stock portfolio.

Accepted Answer

A)   drag down
B)   increase gains in
C)   equal the growth in
D)   outpaceE) B) and D)
F) None of the above

Question 9

A life-cycle fund holds assets designed to meet the needs of individuals who

Accepted Answer

A)   plans to retire in 2050.
B)   will need funds for college costs in 2030.
C)   will retire at a particular age.
D)   believes a recession is eminent.E) A) and C)
F) None of the above

Question 10

The primary objective of ________ funds is capital appreciation.

Accepted Answer

A)   growth
B)   life-cycle
C)   target-date
D)   valueE) A) and B)
F) C) and D)

Question 11

Gold values tend to _________ during times of economic growth and stability and __________ during times of economic and political uncertainty.

Accepted Answer

A)   increase; decrease
B)   decrease; increase
C)   increase; increase
D)   decrease; decreaseE) None of the above
F) B) and D)

Question 12

Which fund structure does not allow for the daily creation and redemption of shares by the issuer or its trustee?

Accepted Answer

A)   Open-end fund
B)   Closed-end fund
C)   Exchange-traded fund
D)   Unit investment trustE) A) and C)
F) B) and C)

Question 13

A fee charged to compensate sales professionals for the marketing and advertising of fund shares is known as a(n)

Accepted Answer

A)   annual management fee.
B)   annual 12b-1 distribution fee.
C)   computerized account fee.
D)   redemption fee.E) B) and C)
F) None of the above

Question 14

Which of the following is not an advantage of buying fund shares through a financial supermarket?

Accepted Answer

A)   Ability to purchase in larger increments
B)   Ability to switch money from fund to fund easily
C)   Consolidated financial report
D)   Ability to purchase from several fund familiesE) B) and C)
F) A) and D)

Question 15

An investment company that pools money from many investors and invests those funds in a variety of assets is called a

Accepted Answer

A)   common stock.
B)   preferred stock.
C)   mutual fund.
D)   portfolio fund.E) A) and D)
F) C) and D)

Question 16

Mutual funds allow the common investor without much initial capital to be able to ________, a strategy not easily employable among stocks and bonds unless you have large amounts of capital.

Accepted Answer

A)   diversify
B)   designate a beneficiary
C)   liquidate holdings
D)   withdraw with no penaltiesE) A) and B)
F) A) and D)

Question 17

Which fund would you expect to produce the greatest returns?

Accepted Answer

A)   Income fund
B)   Balanced fund
C)   Growth fund
D)   Growth and income fundE) None of the above
F) A) and B)

Question 18

If you purchase a residential rental property for $250,000 that includes a building worth $100,000, how much will you be able to deduct per year from your rental income if the IRS allows you to spread the cost of your initial investment over 27.5 years?

Accepted Answer

A)   $3,636
B)   $5,455
C)   $9,091
D)   $12,727E) C) and D)
F) All of the above

Question 19

Which is an advantage of buying mutual funds through a "financial supermarket"?

Accepted Answer

A)   Ability to purchase funds from different fund families
B)   Easily switch funds from the same family at no cost
C)   Receive break-point discounts for volume purchases
D)   Better prices than NAV when selling back to the fundE) A) and C)
F) A) and B)

Question 20

Closed-end funds trade primarily

Accepted Answer

A)   through the fund company's custodian.
B)   through the fund's issuing company.
C)   by the fund's investment banker.
D)   on major stock exchanges.E) B) and C)
F) All of the above

Exam 13: Investing in Mutual Funds and Real Estate

Which is an advantage of buying mutual funds through a "financial supermarket"?

Correct AnswerverifiedShow Answer

A life-cycle fund holds assets designed to meet the needs of individuals who

Correct AnswerverifiedShow Answer

Hiro Watanabe, a successful car dealer in Japan, is looking to invest in and manage shopping malls across California. Which of the following indirect real estate investment choices will Hiro be involved in?

Correct AnswerverifiedShow Answer

A unit investment trust (UIT) is an unmanaged pool of investments that is often composed of

Correct AnswerverifiedShow Answer

If you purchase a residential rental property for $250,000 that includes a building worth $100,000, how much will you be able to deduct per year from your rental income if the IRS allows you to spread the cost of your initial investment over 27.5 years?

Correct AnswerverifiedShow Answer

An investment company that pools money from many investors and invests those funds in a variety of assets is called a

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of buying fund shares through a financial supermarket?

Correct AnswerverifiedShow Answer

Which of the following are considered to be speculative investments?

Correct AnswerverifiedShow Answer

Gold is considered by many to be a hedge against political uncertainty and inflation. Which would not be a recommended method to hedge a stock portfolio with gold?

Correct AnswerverifiedShow Answer

Which fund would you expect to produce the greatest returns?

Correct AnswerverifiedShow Answer

A fee charged to compensate sales professionals for the marketing and advertising of fund shares is known as a(n)

Correct AnswerverifiedShow Answer

Mutual funds allow the common investor without much initial capital to be able to ________, a strategy not easily employable among stocks and bonds unless you have large amounts of capital.

Correct AnswerverifiedShow Answer

During times of strong economic growth, gold tends to ________ your stock portfolio.

Correct AnswerverifiedShow Answer

Fine jewelry is considered a

Correct AnswerverifiedShow Answer

Gold values tend to _________ during times of economic growth and stability and __________ during times of economic and political uncertainty.

Correct AnswerverifiedShow Answer

The primary objective of ________ funds is capital appreciation.

Correct AnswerverifiedShow Answer

Closed-end funds trade primarily

Correct AnswerverifiedShow Answer

Which fund structure does not allow for the daily creation and redemption of shares by the issuer or its trustee?

Correct AnswerverifiedShow Answer

With hundreds of funds to choose from, you need to screen based on key characteristics. Which is not a key risk and return characteristic?

Correct AnswerverifiedShow Answer

A mutual fund that is focused more on reducing investment risk by investing in both stocks and bonds is called a

Correct AnswerverifiedShow Answer

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Gold values tend to _ during times of economic growth and stability and __ during times of economic and political uncertainty.

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