FP 101 Week 6 Quiz

Complete the Week 6 Quiz provided by your facilitator.

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Week 6

1. Which of the following steps is NOT a factor to be considered before making your first investment?
2. Work to balance your budget.
3. Manage your credit card debt.
4. Save at least $10,000 to invest.
5. Start an emergency fund.

2. As people approach retirement, which of the following holds true for most?
3. Their choices of investments do not change.
4. They choose more conservative investments.
5. They choose more risky investments.
6. They move all their money into certificates of deposit.

3. When choosing an investment, you should consider risk. The four primary risk components are
4. Business failure, inflation, buying power, stock
5. Buying power, inflation, interest rate, market
6. Inflation, interest rate, business failure, market
7. Market, bond, stock, inflation

4. The process of spreading your assets among several different types of investments to lessen risk is called
5. Asset allocation
6. Asset combination
7. Asset investments
8. Asset returns

5. If you need access to your funds in two years or less, which of the following investments would be least appropriate?
6. Cash
7. Certificates of deposit
8. Short-term government bonds
9. Stocks and mutual funds

6. Some financial experts suggest that investors include a percentage of growth investments as part of their portfolio. This can be calculated by subtracting your age from
7. 90
8. 100
9. 110
10. 120

7. Timothy has $100 automatically invested in stock each month. This way, he does not buy high and sell low. He is using a
8. Buy and hold technique
9. Direct investment plan
10. Direct reinvestment plan
11. Dollar cost averaging technique

8. What happens to the price of bonds when interest rates go up?
9. It goes down.
10. It goes up.
11. Bond prices are unaffected by fluctuations in interest rates.
12. It stays the same. Bond prices are determined by the market dynamics of buying and selling.

9. Since 1926, the average annual return for stocks has been about
10. 8%
11. 10%
12. 12%
13. 14%

10. Which of the following is a fund that invests in stocks or securities contained in specific stock or securities index?
11. Closed-end fund
12. Exchange-traded fund
13. No-load fund
14. Open-end fund

11. A no-load mutual fund
12. May allow investors to pay a sales charge
13. Charges commission when you buy shares
14. Can charge a fee of up to 0.25% of its assets
15. Is available only via the Internet

12. Which of the following types of stock funds invests in the same companies included in the Standard & Poor’s 500 stock index?
13. Equity income funds
14. Growth funds
15. Index funds
16. International funds

13. An example of a lifecycle fund is a fund that
14. Assists investors with planning for retirement by a specific date
15. Initially invests in conservative securities, then changes to invest in more risk-oriented securities as time goes by
16. Invests in shares of other mutual funds in order to increase diversification and asset allocation
17. Has principal protection as its main objective

14. At what age are you are required to begin withdrawing money from non-Roth IRA’s?
15. At age 70 ½
16. Never – You can die without ever having withdrawn a penny from it and pass it income-tax free to your heirs.
17. When you begin receiving Social Security payments
18. At age 59 1/2

15. Money in a 401(k) grows in what way
16. Tax-free
17. Tax-exempt
18. Tax-deferred
19. Taxable