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Exam 1: The Investment Environment

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Question 21

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On a net basis, funds in the financial markets are generally supplied by

A) individuals.
B) both individuals and business firms.
C) business firms.
D) the government.

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Question 22

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Stringent regulations and vigorous enforcement have all but eliminated unethical behavior by financial professionals in recent years.

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Question 23

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Discuss the general investment philosophy and the types of investments preferred by investors in each phase of the life cycle.

A person's marginal tax rate is the rate they pay

Certified Financial Planners typically manage institutional portfolios.

Retirement plans, such as a 401(k), allow employees to defer taxes on the plan contributions until such time as the funds are withdrawn from the retirement plan.

A well-conceived investment policy statement will take into account

Bond investors lend their money for a fixed period of time and receive interest.

Which of the following investments represents partial ownership of a corporation?

U.S. Treasury Bills mature in 1 year or less.

A collection of securities designed to meet an investment goal is called a portfolio.

Exchange traded funds are similar to mutual funds, but are traded like stocks.

In the financial markets, individuals are net suppliers of funds.

An exchange traded fund that invests in the stocks of large corporations is an example of

A major function of investment banking firms is

An option to purchase common stock is a type of derivative security.

Jobs in which of the following fields require an understanding of the investment environment? I. commercial banking II. corporate finance III. financial planning IV. insurance

A United States Savings Bond is an example of an investment as defined in the text.

Institutional investors manage money for businesses and nonprofit organizations, but not for individuals.

Short-term investments I. provide liquidity. II. fill an important part of most investment programs. III. provide a high rate of return with low risk. IV. provide resources for emergencies.