Site MapHelpFeedbackMultiple Choice Quiz
Multiple Choice Quiz
(See related pages)

1
__________ refer to strategies aimed at attaining the established rate of return requirements while meeting expressed risk tolerance and applicable constraints.
A)Investment constraints
B)Investment objectives
C)Investment policies
D)all of the above
E)none of the above
2
An important benefit of Keogh plans is that
A)they are not taxable until funds are withdrawn as benefits.
B)they are protected against inflation.
C)they are automatically insured by the Federal government.
D)A and B
E)A and C
3
The prudent investor law requires __________.
A)executives of companies to avoid investing in options of companies by which they are employed
B)executives of companies to disclose their transactions in stocks of companies by which they are employed
C)professional investors who manage money for others to avoid all risky investments
D)professional investors who manage money for others to constrain their investments to those that would have been approved by the prudent investor
E)none of the above
4
One incorrect belief that is often cited as a reason for fully-funded pension funds to invest in equities is that
A)stocks provide a hedge against inflation.
B)bonds have lower returns.
C)stocks have higher risk.
D)stocks have higher returns.
E)All of the above are incorrect beliefs that are often cited.
5
Workers who change jobs may wind up with lower pension benefits at retirement than otherwise identical workers who stay with the same employer, even if the employers have defined benefit plans with the same final-pay benefit formula. This is referred to as
A)an accumulated benefit obligation.
B)an unfunded liability.
C)the portability problem.
D)indexation.
E)immunization.
6
A remainderman is
A)a stockbroker who remained working on Wall Street after the 1987 crash.
B)one who receives the principal of a trust when it is dissolved.
C)one who receives interest and dividend income from a trust during their lifetime.
D)an employee of a trustee.
E)none of the above
7
Suppose that the pre-tax holding period returns on two stocks are the same. Stock X has a high dividend payout policy and stock Y has a low dividend payout policy. If you are an individual in a high marginal tax bracket and do not intend to sell the stocks during the holding period,
A)stock X will have a higher after-tax holding period return than stock Y.
B)the after-tax holding period returns on stocks X and Y will be the same.
C)it is impossible to determine which stock will have a higher after-tax holding period return given the information available.
D)stock Y will have a higher after-tax holding period return than stock X.
E)none of the above
8
The first step a pension fund should take before beginning to invest is to
A)establish investment objectives.
B)develop a list of investment managers with superior records to interview.
C)establish asset allocation guidelines.
D)decide between active and passive management.
E)none of the above
9
Investors seeking to diversify are likely to find that their largest investment is in
A)stocks.
B)bonds.
C)foreign securities.
D)their job.
E)cash.
10
Deferral of capital gains tax
  1. means that the investor doesn't need to pay taxes until the investment is sold.
  2. allows the investment to grow at a faster rate.
  3. means that you might escape the capital gains tax if you live long enough.
  4. provides a tax shelter for investors.
A)II and III
B)I, II, IV
C)I, III, and IV
D)II, III, and IV
E)none of the above





To learn more about the book this website supports, please visit its Information Center.
(c)2014 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Notice.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.


InvestmentsOnline Learning Center

Home > Chapter 28 > Multiple Choice Quiz