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CSM Financial Management

  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goal

2. Corporate earnings - earnings per share - price earnings rato (PE) - dividend payout - dividend yield - total return - beta - market to book ratio

3. Stocks Day trading - margin buying - selling short - option trading

4. Investing in something that could have a risk of a world wide issue

5. An equity security that pays regular often steadily increases dividends and offers a high yield that may generate the majority of overall returns

6. An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks and bonds

7. Aggressive growth funds - equity income funds - global stock funds - growth stock funds - index funds - international funds - large cap funds - mid cap funds - small cap funds - regional funds - sector funds - socially responsible funds

8. Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares after a predetermined date

9. A market that exists between companies and financial institutions that is used to raise equity capital for the companies

10. Stocks buy& hold - dollar cost averaging - direct investment and DRIPS

11. A portfolio management strategy and model for investing in fixed income that involves purchasing multiple bonds - each with different maturity dates

12. A risk management technique that mixes a wide variety of invests within a portfolio

13. A debt security issued by a government spending most often issued in the country's domestic currency

14. The degree to which an asset or security can be bought or sold in the market without affecting the asset's price

15. 1. What will you use money for 2. how much will you need 3. how long will it take 4. are there obstacles 5. will you make sacrifices 6. what if you don't reach the goal

16. Not much risk is involved

17. Interest rate risk - face value volatility - no hedge against inflation - principal does not appreciate - difficult to compound

18. Possible hedge against inflation - easy purchase on indirect ownership - limited financial responsibility for indirect ownership - financial leverage - positive cash flow - no management concerns on indirect ownership

19. Diversification - affordability - professional management - liquidity - low transaction costs - no disadvantages

20. A debt security issued by a corporation and sold to investors - higher risk higher risk and government bond

21. A type of preferred stock with a provision that stipulates that if any dividends have been omitted in the past they must be paid out to preferred stockholders before common shareholders can receive dividends

22. Company could fail - market volatility - uncertain yield - management time required - risk

23. By make a risky investment you can be returned with a lot of money or losing some

24. A lot of risk is involved

25. An order placed with a brokerage to buy or sell a set number of shares at a specific price or better

26. Primary residence: you hold legal title - place to live - mortage interest is tax deductible - usually an inflation hedge - beware of housing bubbles

27. A stock that rises quickly when economic growth is strong and falls rapidly when growth is slowing down

28. A stock that provides a constant dividend and stable earnings regardless of the state of the overall stock market

29. Call feature - sinking fund - serial redemption

30. Initial public offerings - investment banks

31. A short term debt obligation backed by the U.S. government with a maternity of less than one year

32. Fundamental analysis - technical analysis - efficient market theory

33. Close ended funds (2%): shares are traded limited and must purchase from another investor -exchange trade funds (6%): tied to a specfic index - open end funds (92%): shares issued and redeemed by the company at net asset value (NAV)

34. A nationally recognized - well-established and financially sound company

35. Pay yourself and make investing automatic - save extra funds like gifts - partcipate in your employeers retirement plan - make installment payments to yourself - break a habit - get a part-time job

36. Illiquidity - declining property values - lack of diversification - long depreciation period - management problems - syndicate investment is not a tax shelter

37. Evaluate potential investments - seek assistance if needed - monitor the value of investments - keep accurate and current records - consider tax consequences of selling

38. A marketable fixed interest U.S. government debt security with a maturity of more than 10 years

39. An order to buy or sell a security when it's price surpasses a certain point

40. Cash dividends - price appearance - hedge against inflation - low minimum investment - limited liability - liquidity

41. The risk inherent to the entire market or entire market segment unsystematic: company or industry specific risk that is inherent in each investment

42. Debenture bond - mortage bond - subordinated debenture bond - convertible bond - high yield bond

43. To raise money for start up - on going activities or expansion - no repayment required - dividends are not mandatory - they lose some control of the company through voting rights

44. A marketable U.S. government debt security with a fixed interest rate and a maturity between one and 10 years

45. An order that an investor makes through a broker or brokerage service to buy or sell an investment immediately at the best available current price

46. Written promise to pay with legal conditions (indenture) - face value - maturity date - interest rate=coupon rate - trustee

47. The process of selecting investments with a higher risk in order to profit from an anticipated price movement

48. The uncertainty over the future real value (after inflation) of your investment

49. Securities exchanges - over the counter market

50. The risk that an investments value will change due to the change due to the change in the absolute level of interest rates