Investment and Certified Financial Planner

Investing in the stock market is a good way to meet which of the following savings goals? ||A. ||A vacation next summer||B. ||A new car in 3 years||C. ||College in 15 years||D. ||A down payment on a house in 4 years|||2) What should you do if you don’t want to spend a lot of time managing your investments? ||A. ||Get out of the game. Successful investing requires time and attention. If you don’t have the time to devote to it, you shouldn’t do it. ||B. ||Invest in last year’s best-performing mutual fund. |C. ||Invest in an index fund or ETF that tracks the entire stock market. ||D. ||Invest in bond funds and other stable-value funds. |||3) When choosing a financial advisor, you should look for one who is interested in meeting with||A. ||the head of the family or the person making the financial decisions||B. ||you at your house||C. ||you and your spouse or partner at the advisor’s office||D. ||both you and your spouse or partner at your house|||4) Which of the following should you look for when choosing a financial advisor? ||A. |A Certified Financial Planner with at least 15 years of experience ||B. ||Someone who recently became a Certified Financial Planner and is, therefore, up to date on recent changes in tax law||C. ||A Certified Financial Planner who earns commissions||D. ||A fee-based financial advisor who specializes in insurance, taxes, and estate planning|||5) Which of the following is a good plan of action when the stock market is performing poorly? ||A. ||Get out of stocks temporarily and shift back into them when the market stabilizes||B. |Subtract your age from 100 and put that portion of your investments in bonds||C. ||Increase the amount you put into stocks and decrease your contributions to bonds and stable-value funds||D. ||Continue to invest the same amount of money in your mutual funds on a monthly basis|||6) What should you do if your company’s 401(k) plan does not offer an index fund? ||A. ||Invest only in bonds in your 401(k) and in index funds in your Roth IRA. ||

B. ||Invest in the lowest-cost stock funds that give you diversity among small, medium, and large companies. |C. ||Invest in a sector fund that has been performing well in the current economy. ||D. ||Stop investing in your 401(k) and invest in index funds in a taxable account. |||7) How should you adjust your retirement saving strategy if you are uncomfortable owning stocks? ||A. ||Invest a modest amount each month in individual bonds and bond funds. ||B. ||Plan on saving even more each month than you would if you had invested in stocks–or expect to live on less in retirement. ||C. ||Plan on retiring at age 80 or later. ||D. |Invest in high-yield bonds with maturities of 10 years or more. |||8) What happens to the price of bonds when interest rates go up? ||A. ||It goes down ||B. ||It goes up. ||C. ||Nothing. Bond prices are unaffected by fluctuations in interest rates. ||D. ||It stays the same. Bond prices are determined by the market dynamics of buying and selling. |||9) What one thing can have the biggest impact on a mutual fund’s performance over time? ||A. ||Its expense ratio ||B. ||The track record of its manager||C. ||The sales load you paid when you bought it ||D. |The amount of money it holds|||10) Which of the following should you look for when evaluating mutual funds? ||A. ||A small, back-end load||B. ||A small front-end load||C. ||No load and a low expense ratio||D. ||A small front-end load and a low expense ratio|||11) Which of the following is characteristic of an actively managed fund? ||A. ||It has one or more managers who decide what to buy and sell. ||B. ||It has a high volume of daily trading. ||

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C. ||It tracks an index like the Standard ; Poor’s 500. ||D. ||It tends to have lower expenses than other funds. ||12) What is the principal difference between an exchange-traded fund (ETF) and a mutual fund? ||A. ||ETFs have higher expense ratios. ||B. ||ETFs are less expensive to buy. ||C. ||ETFs can be bought or sold at any time during the day when the market is open. ||D. ||ETFs provide greater diversification than mutual funds. |||13) Which of the following is a loan to a company or to the government on which you earn interest until you receive your money back in a specified number of years? ||A. ||A stock||B. ||A bond||C. ||A personal loan||D. |A target fund|||14) Which of the following is an investment that holds shares of many companies but trades like a stock? ||A. ||An equity mutual fund||B. ||A stock mutual fund||C. ||An exchange-traded fund ||D. ||An index fund|||15) Which of the following best describes dollar-cost averaging? ||A. ||The process of investing an average of a dollar a day in a stock mutual fund||B. ||Investing an increasing dollar amount each month of the year||C. ||Timing the market so that you buy more when share prices drop||D. ||Investing a set dollar amount at regular intervals throughout the year||||