wealthmanagement quiz n answers

8/14/2019 wealthmanagement quiz n answers

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FinancialFinancialPlanningPlanning

andand

WealthWealthManagementManagement


2/50

A z ero coupon bond:a. is sold at a discount to face value.

b. is worthless.

c. matures immediately.

d. always has a call feature.


3/50

A z ero coupon bond: is sold a t a di sco unt t o f ace va lue. is worthless.

matures immediately.

always has a call feature.


4/50

Sto cks whose retu rn s areti ed closel y to th e over allnational economy aretypi call y call ed:

a. Blue Chip stocks.

b. Defensive stocks.

c. Speculative stocks.

d. Cyclical stocks.


5/50

Sto cks whose retu rn s areti ed closel y to th e over allnational economy aretypi call y call ed:

Blue Chip stocks.

Defensive stocks.

Speculative stocks.

Cycli ca l s tocks.


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7/50

Mo rt gage pa yment s: Can be completely deducted from income

for tax purposes.

Vary from month to month on a fixed rateloan.

Represent high principal payments earlyin the term of the loan.

Ar e typica ll y ta x deduct ib le t o t heex tent t ha t t hey r epr ese nt pa ymentof in terest .


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9/50

For tax p urpos es, a capit al ga in isconside red lo ng term if theinves tm ent was held more tha n: 6 month

1 yea r 5 years

10 years


10/50

A 35 -ye ar old indi vidual wit h 4yo ung chi ldren and a spo use whodo esn t work should pr oba blyconside r p urchasing whic h of thefol lo wing type s of insura nc e:a. Long-term care insurance.

b. Disability insurance.c. Life insurance.

d. (b) and (c).


11/50

A 35 -ye ar old indi vidual wit h 4yo ung chi ldren and a spo use whodo esn t work should pr oba blyconside r p urchasing whic h of thefol lo wing type s of insura nc e: Long-term care insurance.

Disability insurance. Life insurance.

(b ) and (c).


12/50

Inv estmen ts i n CDs :a. are riskier than investments in stocks.

b. are inferior to investments in 8-tracks and

vinyl records.c. are always tax deferred.

d. are insured by the FDIC, but havegenerally underperformed stockinvestments over the long run.


13/50

Inv estmen ts i n CDs : are riskier than investments in stocks.

are inferior to investments in 8-tracks and

vinyl records. are always tax deferred.

are i ns ured by the FDIC, but ha vegenera lly und erperfor me d stockinve stment s ove r t he l ong run .


14/50

The ne t as set va lue (NA V) of abo nd f und:a. cannot be determined.

b. changes as interest rates change.

c. is determined by the average couponrates of the bonds in the fund.

d. will not change as bonds in the fund are

bought or sold.


15/50

The ne t as set va lue (NA V) of abo nd f und: cannot be determined.

changes as int erest r at es cha ng e. is determined by the average coupon

rates of the bonds in the fund.

will not change as bonds in the fund are

bought or sold.


16/50

Disabi li ty i ncome i nsu ra nc e:a. Can cover part of your lost income while

you are disabled.

b. Pays medical expenses associated with adisability.

c. Should only be purchased by starathletes.

d. Is primarily for the unemployed.


17/50

Disabi li ty i ncome i nsu ra nc e: Ca n cover pa rt of y our l ost inco mewhi le you are di sab led. Pays medical expenses associated with adisability.

Should only be purchased by starathletes.

Is primarily for the unemployed.


18/50

If yo u cal l yo ur bro ke r topurc ha se a "ro un d lot " yo u ar e:a. Buying a mutual fund of 100 different

stocks.

b. Authorizing him/her to decide how manyshares to buy.

c. Negotiating commissions on future

purchases and sales.d. Purchasing 100 shares of a specific stock.


19/50

If yo u cal l yo ur bro ke r topurc ha se a "ro un d lot " yo u ar e: Buying a mutual fund of 100 different

stocks.

Authorizing him/her to decide how manyshares to buy.

Negotiating commissions on future

purchases and sales. Purcha si ng 100 sh ar es of a s pec ificstock.


20/50

Va ri abl e l ife insu ra nce:a. Offers tax deferral.

b. May provide higher return potential and

greater risk than a whole life policy.c. Allows you to invest a portion of the

premium in various subaccounts.

d. All of the above.


21/50

Va ri abl e l ife insu ra nce: Offers tax deferral.

May provide higher return potential and

greater risk than a whole life policy. Allows you to invest a portion of thepremium in various subaccounts.

Al l of th e above .


22/50

Und er the pro vis io ns of Inc om eTa x Act, 19 61 , "T rans po rtAll ow anc e" is exe mpt upt oa. Rs. 800 per month

b. Rs.400 per month

c. Rs. 500 per month

d. Rs. 9000 per year lump sum


23/50

Und er the pro vis io ns of Inc om eTa x Act, 19 61 , "T rans po rtAll ow anc e" is exe mpt upt o Rs . 80 0 p er m ont h Rs.400 per month

Rs. 500 per month

Rs. 9000 per year lump sum


24/50

Divi den ds ar e taxed :a. At the investors marginal income tax rate.

b. At a maximum rate of 15%.

c. Only when the stock is sold.d. Dividends are never taxed.


25/50

Divi den ds ar e taxed : At the investors marginal income tax rate.

At a max imum r at e of 15%. Only when the stock is sold. Dividends are never taxed.


26/50

The term gene ra ll y used tode scr ibe the marke t in whichpr ic es full y refl ect al l ava ila bleinformation is:a. The greater fool hypothesis.

b. Random walk hypothesis.

c. The size-effect hypothesis.

d. Efficient markets hypothesis.


27/50

The term gene ra ll y used tode scr ibe the marke t in whichpr ic es full y refl ect al l ava ila bleinformation is: The greater fool hypothesis.

Random walk hypothesis.

The size-effect hypothesis.

Eff icient m ar kets hyp othesi s.


28/50

If a mutual fund managerincreases his /he r cash po sit io n, itcan be said:

a. The manager is anticipating a bearmarket.

b. The manager is anticipating a bull market.

c. The manager is trying to reduce the

funds taxable gains.

d. The manager is aggressive.


29/50

If a mutual fund managerincreases his /he r cash po sit io n, itcan be said:

The ma nag er i s anti cip ati ng a b earma rket . The manager is anticipating a bull market.

The manager is trying to reduce the

funds taxable gains.

The manager is aggressive.


30/50

Determining t ot al ret u rn typicallyut ili ze s the :a. Inflation-adjusted annual performance of

all mutual-funds.

b. Annual capital gain plus dividend payoutof a stock or fund.

c. Math skills learned in college-levelcalculus courses.

d. Dividend yield on the Dow JonesIndustrial Average.


31/50

Determining t ot al ret u rn typicallyut ili ze s the : Inflation-adjusted annual performance of

all mutual-funds.

Annu al capi tal ga in p lu s di vid endpa yout of a st ock or f und . Math skills learned in college-level

calculus courses.

Dividend yield on the Dow JonesIndustrial Average.


32/50

A mutu al fun d i sa. A share of a companys stock

b. A pool of money managed by an

investment companyc. An insurance policy

d. A brokerage account


33/50

A mutu al fun d i s A share of a companys stock

A pool of mone y ma na ged by aninve stment compa ny

An insurance policy

A brokerage account


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35/50

The be st way to re sear ch a stoc kis to look at: The companys management team and its

track record The outlook for the industry and the

companys position in it

The price/earnings ratio

All of the above


36/50

Being yo ur ow n fina ncial pla nnerentailsa. A fair amount of time

b. A willingness to research money andbusiness topics

c. Knowing how much risk yourecomfortable with

d. All of the above


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38/50

If a stoc k ha s a highpr ic e/earnings ra tio it can meana. The outlook for the stock is rosyyou

should buy

b. The stock is considered cheap compared toothers in the industry

c. The stock is considered pricey and may betrading at its high

d. The stock is trading at the same price asthe overall market


39/50

If a stoc k ha s a highpr ic e/earnings ra tio it can mean The outlook for the stock is rosyyou

should buy

The stock is considered cheap compared toothers in the industry

The s tock i s co nsi dered pri ce y andma y b e tra di ng a t it s hi gh The stock is trading at the same price as

the overall market


40/50

Tre as ur y bo nds a rea. Issued by the government and carry no

credit risk

b. Issued by local governments and can varyin quality

c. Bonds that pay the highest interest rateof all bond types

d. Issued by corporations to financeacquisitions and expansions


41/50

Tre as ur y bo nds a re Is sued by t he g ove rnment andcar ry no cred it r is k Issued by local governments and can vary

in quality

Bonds that pay the highest interest rateof all bond types

Issued by corporations to financeacquisitions and expansions


42/50

Bind ing Aut hor it y of an insur anc ebr oker means ____ _.a. the authority of brokers to accept risks

within certain limits and term as set outby the Insurers

b. the contract by which a broker is boundto the insurance companies

c. the contract by which a broker is bound

to the clientsd. the regulatory authority that binds

brokers to the regulations


43/50

Bind ing Aut hor it y of an insur anc ebr oker means ____ _. the aut hori ty of br ok ers t o acc eptrisk s wi thin ce rta in l imit s and ter mas set out b y the Ins ur ers the contract by which a broker is bound

to the insurance companies

the contract by which a broker is bound

to the clients the regulatory authority that binds

brokers to the regulations


44/50

If a Co mpany de cla res and pa ysdi vide nd, this tra ns ac tio nwill____.

reduce stockholders equity increase liabilities

decrease net income

not affect total assets


45/50

If a Co mpany de cla res and pa ysdi vide nd, this tra ns ac tio nwill____.

reduc e st ockhol de rs equi ty increase liabilities

decrease net income

not affect total assets


46/50

A re cognis ed Pro vident Fundacquires its stat us on re cognit io nby __ __ ___ _.

a. SEBIb. Income Tax authorities

c. PF Commissioner

d. Labor Ministry


47/50

A re cognis ed Pro vident Fundacquires its stat us on re cognit io nby __ __ ___ _.

SEBI Income Tax a uthori ties PF Commissioner

Labour Ministry


48/50

A typ e of ris k wit h high fr eque nc ybut lo w seve rit y is pro ba bly be sthandl ed by:a. Transfer

b. Coinsurance

c. Reinsurance

d. Self Insurance


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wealthmanagement quiz n answers

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