Multiple Choice Answers

Question 1
A mutual fund in which shares are issued only when the fund is organized is called a(n) __________ fund.
A. closed-end
B. open-end
C. load
D. no-load

Question 2
The Capitalist Mutual Fund’s portfolio is valued at $45 million. The fund has liabilities of $3 million, and the investment company sponsoring the fund has issued 1,600,000 shares. What is the fund’s net asset value?
A. $100
B. $26.25
C. $52.50
D. $3.75

Question 3
The commission charge for purchasing shares of a load fund that imposes an up-front commission charge is __________ percent.
A. 1 to 2
B. 2 to 4   this question is tricky as it is usually anywhere from 3-6 – be sure to check your text on this one.
C. 5 to 6 1/2
D. as high as 8 1/2

Question 4
A mutual fund in which no sales charge is paid by the individual investor is called a(n) __________ fund.
A. closed-end
B. open-end
C. load
D. no-load

Question 5
The average management fee for all mutual funds is:
A. less than 0.25%.
B. 0.25% to 0.50%.
C. 0.50 to 1.25%.
D. 1.25 to 2.50%.

Question 6
A fee that some investment companies charge for marketing and distributing a mutual fund is called a:
A. 14A-1 fee.
B. 12b-1 fee.
C. 18-2 fee.
D. 21-AB fee.

Question 7
All the different management fees and fund’s operating costs are often referred to as a(n):
A. investment ratio.
B. expense ratio.
C. financial ratio.
D. management ratio.

Question 8
Which of the following statements is FALSE?
A. Individual investors should be involved in choosing a mutual fund because they know how the objectives of a mutual fund match their own investment objectives.
B. Professional fund managers do make mistakes.
C. Although investing in mutual funds provides professional management, individual investors should continually evaluate their mutual fund investments.
D. There is no need to evaluate mutual fund investments because investment companies hire the best professional managers they can to manage their funds.

Question 9
The typical expense ratio for an index fund is:
A. 0.50% or less.
B. between 0.50 and 1%.
C. between 1 and 2%. The expense ratio of the average large cap actively managed mutual fund as 05 is 1.36% – Be sure to check these text specific numbers as they vary based on source and you need to ensure this number matches your text.
D. between 2 and 3%.

Question 10
The most popular and least complicated method of purchasing shares in an open-end mutual fund is through a:
A. regular account transaction.
B. voluntary savings plan.
C. contractual savings plan.
D. minimum withdrawal plan.

Question 11
Sharon Tate has a mutual fund and she has all dividend income and capital gains income used to purchase additional shares in her mutual fund. Which of the following plans is she using?
A. A regular account transaction
B. A voluntary savings plan
C. A contractual savings plan
D. A reinvestment plan

Question 12
An example of a direct real estate investment is a:
A. real estate dwelling.
B. real estate syndicate.
C. real estate investment trust.
D. mortgage pool.

Question 13
If you want a risk-proof real estate investment, invest in:
A. real estate investment trusts.
B. real estate limited partnerships.
C. participation certificates (PCs).
D. real estate syndicates.

Question 14
An example of an indirect real estate investment is:
A. a single-family home.
B. a duplex.
C. a real estate investment trust (REIT).
D. land.

Question 15
One of the advantages of being a limited partner in a real estate investment venture is that you have __________ liability.
A. no financial
B. unlimited financial
C. limited financial
D. implied

Question 16
Illiquidity in real estate means that:
A. you can quickly sell the property.
B. you don’t have a water well on the property.
C. you cannot quickly sell the property.
D. you don’t have financial leverage.

Question 17
For residential real estate investments, the depreciation period now is __________ years.
A. 7 1/2
B. 17 1/2
C. 20 1/2
D. 27 1/2

Question 18
You can avoid storage and assaying problems by investing in:
A. gold wafers.
B. gold bars.
C. gold bullion.
D. gold bullion coins.

Question 19
Owen Cartwright has joined a real estate syndicate that bought an office building in downtown Orlando, Florida. What type of investment does he hold?
A. Direct investment in real estate
B. Indirect investment in real estate
C. Investment in precious metals
D. Investment in collectibles

Question 20
Brian Wilson has a baseball card collection passed down to him from his grandfather. He is particularly proud of the signed Hank Aaron baseball card that he has. What type of investment does he hold?
A. Direct investment in real estate
B. Indirect investment in real estate
C. Investment in precious metals
D. Investment in collectibles

Multiple Choice Answers

Question 1 of 20
Alicia Cooper makes sure to contribute ten percent of her monthly earnings to her 401(k) plan at work. Her 401(k) plan allows her to invest in several different types of mutual funds. Which suggestion for the obtaining money she needs for investing is she following?
A. Paying herself first
B. Taking advantage of employer-sponsored retirement programs
C. Participating in an elective savings program
D. Making a special effort once or twice a year to save

Question 2 of 20
After the death of her husband, Gina Baker, 35, received a check for $350,000 from a life insurance company. Gina has two small children and wants to make sure that both she and the children are taken care of in the future. Based on this information, which of the investment factors listed below would be the most important to Gina in her investment program?
A. Liquidity
B. Safety
C. Business failure
D. Market risk

Question 3 of 20
Gina Davidson has received $50,000 in a divorce settlement and is trying to decide how to invest it. She has looked at stocks but knows that some stocks have lost a lot of value for their owners recently. What aspect of investing is she most concerned about?
A. Risk
B. Return
C. Diversification
D. Liquidity

Question 4 of 20
An individual can reduce the amount of risk associated with an investment program by using:
A. an investment timer.
B. asset allocation.
C. a portfolio picker.
D. a personal investment notebook.

Question 5 of 20
Which of the following statements is FALSE?
A. Investors often make the mistake of putting all of their “eggs in one basket.”
B. Diversification in an investment portfolio is one way to lessen the risk factor.
C. The amount of time a specific investment has to work is of little importance when choosing the investment alternative.
D. Younger investors tend to invest a large percentage of their nest egg in growth-oriented investments.

Question 6 of 20
Brenda Lee has received a $10,000 gift from her mother and is trying to decide how to invest it. She thinks she would like to invest it in stocks because she knows that stocks have been earning about a 10% rate of interest over the last several years. What aspect of investing is Brenda most concerned about?
A. Risk
B. Return
C. Diversification
D. Liquidity

Question 7 of 20
Which of the following statements is true about financial planning?
A. Any kind of financial expert (such as a stockbroker, lawyer, or accountant) can help you develop a comprehensive financial plan.
B. Once you have painstakingly developed a financial plan, it is not wise to change it.
C. Once you have made a decision to buy an investment, there is no need for continued evaluation.
D. You must always consider the tax consequences of selling your investments.

Question 8 of 20
Terri Hamilton has just received $30,000 from an uncle who died and is trying to decide how to invest it. She has done some research has decided that about 30% of the money should go into large cap stocks, 20% into medium cap stocks, 15% into small cap stocks, 10% into bonds, 10% into foreign stocks and 15% into cash. She thinks that even if one area does not do that well, the rest will so that her overall return will be pretty good. What aspect of investing is Terri most concerned about?
A. Risk
B. Investment Growth
C. Diversification
D. Liquidity

Question 9 of 20
Dividends are paid out of profits, and:
A. dividend payments must be approved by the firm’s board of directors.
B. dividends are guaranteed.
C. dividends are paid before a firm’s taxes are paid.
D. dividends are usually paid twice a year.

Question 10 of 20
Rita Smith owns 220 shares of Jefferson Carpet Mills. For the last calendar quarter, Jefferson Carpet Mills paid a dividend of $0.47 a share. What is the total amount she received in her dividend check for this quarter?
A. $0.47
B. $47
C. $94
D. $103.40

Question 11 of 20
Jo Bower owns 150 shares of Data General stock. She purchased the stock for $24 a share. She sold her stock for $30 a share. The commissions required to buy and sell her stock totaled $120. Assuming that she received no dividends during the time she owned the stock, what is her total return for this transaction?
A. $600
B. $780
C. $900
D. $2,400

Question 12 of 20
The type of preferred stock that may be exchanged at the stockholder’s option for common stock is:
A. corporate bond.
B. convertible preferred stock.
C. participating preferred stock.
D. cumulative preferred stock.

Question 13 of 20
Which of the following is a true statement?
A. The dividends-earnings ratio is a key factor that serious investors use to evaluate stock investments.
B. The price-earnings ratio for a corporation must be studied for one period only.
C. The price-earnings ratio is based on the company’s dividends.
D. The price-earnings ratio for one firm may be compared to the price-earnings ratio for all firms.

Question 14 of 20
Book value is determined by:
A. deducting liabilities from assets and dividing the remainder by owner’s equity.
B. deducting liabilities from assets and dividing the remainder by the number of shares of stock outstanding.
C. dividing liabilities by the number of shares of stock outstanding.
D. dividing assets by the number of shares of stock outstanding.

Question 15 of 20
A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called:
A. dollar cost averaging.
B. dividend reinvestment plan.
C. regulated transaction.
D. secured transaction.

Question 16 of 20
A market for existing financial securities that are currently traded between investors is called the __________ market.
A. primary
B. fundamental
C. efficient
D. secondary

Question 17 of 20
What is bond laddering?
A. It’s where an investor buys only long term bonds.
B. It’s where an investor buys only short term bonds.
C. It’s where an investor buys bonds that have maturities that are spread out over a number of maturities.
D. It’s where an investor stacks a bond investment on top of a stock investment.

Question 18 of 20
Which of the following statements is correct?
A. Stock is a form of debt capital.
B. Stock must be repaid at maturity.
C. Bonds are a form of debt capital.
D. Bonds do not have to be repaid at maturity.

Question 19 of 20
John Peterson purchased a bond at a price far below its face value; it that makes no interest payments and will be redeemed at its face value at maturity. In all likelihood, he purchased a(n) __________ bond.
A. zero-coupon
B. convertible
C. indenture
D. registered

Question 20 of 20
If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally:
A. increase in value.
B. decrease in value.
C. remain unchanged.
D. become worthless.

Multiple Choice Answers

1) Big Fizz Co., a manufacturer of cola-flavored drinks, wants to add packaged fruit juices to its existing product line. Big Fizz must make some decisions regarding packaging and branding the fruit juices. These decisions would fall under which variable of the marketing mix?
A. Product
B. Place
C. Promotion
D. Price

2) Hewlett-Packard sells personal computers through specialty computer stores, electronics superstores, and its own Internet site. What is the marketing mix variable that is being considered here?
A. Price
B. Promotion
C. Product
D. Place

3) Marketing strategy planners should recognize that:
A. target markets should not be large and spread out
B. mass marketing is often very effective and desirable
C. large firms like General Electric, Target, and Procter & Gamble are too large to aim at clearly defined markets
D. target marketing is not limited to small market segments
4) Target marketing, in contrast to mass marketing,
A. is limited to small market segments
B. assumes that all customers are basically the same
C. ignores markets that are large and spread out
D. focuses on fairly homogeneous market segments
5) The process of naming broad product-markets and then dividing them in order to select target markets and develop suitable marketing mixes is called:
A. market penetration
B. market segmentation
C. market development
D. market research

6) ______________ is the process of naming broad product-markets and then segmenting these broad product-markets in order to select target markets and develop suitable marketing mixes.
A. Market positioning
B. Market segmentation

C. Mass marketing
D. Diversification

7) Marketing research which seeks structured responses that can be summarized is called
A. focus group research
B. quantitative research
C. qualitative research
D. situation analysis research
8) One of the major disadvantages of the focus group interview approach is that
A. ideas generated by the group cannot be tested later with other research
B. it is difficult to measure the results objectively
C. it is difficult to get in-depth information about the research topic
D. there is no interviewer, so the research questions may not be answered
9) When focus group interviews are used in marketing,
A. each person in the group answers the same questionnaire, to focus the discussion
B. the typical group size is 15 to 20 typical consumers whether online or off-line
C. it is primarily as a follow-up to more quantitative research
D. the research conclusions will vary depending on who watches the interview whether online or off-line
10) Focus groups
A. are usually composed of 10 to 15 people as participants
B. yield results that are largely dependent on the viewpoint of the researcher
C. always do a good job of representing the broader target market
D. have a low cost per participant
11. carefully analyzing secondary data to check his thinking. His next step should be to
A. conduct an experiment
B. develop a formal research project to gather primary data
C. conduct informal discussion with outsiders, including intermediaries, to see if he has correctly defined the problem
D. develop a hypothesis and predict the future behavior of sales

12) The marketing manager at Massimino & McCarthy, a chain of retail stores that sells men’s clothing, is reviewing marketing research data to try to determine if changes in marketing strategy are
needed. Which of the following sources of data would be a secondary data source?
A. Looking through the company’s marketing information system to see past sales trends
B. Reviewing videotapes of a recent focus group
C. Making phone calls to some of the best customers to learn their interest in a new line of clothing
D. Spending time in stores observing customers’ behavior
13) Which of the following statements about consumer products is true?
A. Convenience products are those that customers want to buy at the lowest possible price.
B. Shopping products are those products for which customers usually want to use routinized buying behavior.
C. Specialty products are those that customers usually are least willing to search for.
D. Unsought products are not shopped for at all.

14) The attitudes and behavior patterns of consumers making a purchasing decision are part of the
A. political environment
B. social and cultural environment
C. competitive environment
D. firm’s resources and objectives

15) The observing method in marketing research
A. uses personal interviews
B. may require customers to change their normal shopping behavior
C. is used to gather data without consumers being influenced by the process
D. is not suitable for obtaining primary data
16) The first step in market segmentation should be
A. deciding what new product you could develop
B. evaluating what segments you currently serve
C. finding a demographic group likely to use your products
D. defining some broad product-markets where you may be able to operate profitably

17) The product life cycle
A. describes the stages a new product idea goes through from beginning to end
B. has three major stages
C. applies to categories or types of products as opposed to brands
D. shows that sales and profits tend to move together over time

18) Which of the following is one of the product life cycle stages?
A. Market analysis
B. Market growth
C. Market feedback
D. Market research

19) While watching a television program, Liza gets a phone call just as a commercial is starting. She presses the mute button on the television’s remote control and takes the call, so she pays no attention
to the commercial. In terms of the communication process, the telephone call is an example of what?
A. Encoding
B. Noise
C. Decoding
D. Feedback

20) Which of the following functions are performed by wholesalers in the channel of distribution?
A. Providing information to retailers
B. Placing radio advertisements for retailers
C. Placing newspaper advertisements for retailers
D. Providing goals for retailers

21) Typically the ______________ and the marketing manager are responsible for building good distribution channels and implementing place policies.
A. public relations manager
B. sales manager
C. advertising manager
D. human resources manager

22) SGCA is having a sales contest to encourage retailers to quickly reduce the inventory of SuperGamer computers. Retailers with the highest sales during the next month win an expense paid trip to a special dealer meeting at a resort in Hawaii. This is
A. probably illegal because it might encourage price competition among retailers
B. an example of cooperative advertising
C. the type of promotion that continues to impact sales even after the promotion is over
D. an example of a manufacturer using trade sales promotion in the channel
23) Advertising allowances
A. are incentive monies given to firms further along in the channel to encourage them to advertise or otherwise promote the firm’s products
B. involve intermediaries and producers sharing in the cost of ads
C. allow for coordination and integration of ad messages in the channel
D. set the allowance amount as a percent of the retailer’s actual purchases

24) Price reductions given to channel members to encourage them to promote or otherwise promote a firm’s products locally are
A. quantity discounts
B. brokerage allowances
C. push money allowances
D. advertising allowances

25) A producer using very aggressive promotion to get final consumers to ask intermediaries for a new product has
A. a pulling policy
B. a target marketing policy
C. a selective distribution policy
D. a pushing policy

26) Nantucket Hammocks, Inc., uses dealer incentives, discounts, and sales contests in order to encourage retailers to give special attention to selling its products. Nantucket Hammocks is using
A. exclusive distribution
B. a corporate channel system
C. dual distribution
D. pushing

27) Quality Ceramic, Inc., (QCI) defined five submarkets within its broad product-market. To obtain some economies of scale, QCI decided NOT to offer each of the submarkets a different marketing mix.
Instead, it selected two submarkets whose needs are fairly similar, and is counting on promotion and minor product differences to make its one basic marketing mix appeal to both submarkets. QCI is using the
A. combined target market approach
B. single target market approach
C. multiple target market approach
D. mass marketing approach

28) When segmenting broad product-markets, cost considerations tend
A. to encourage managers to disregard the criterion that a product-market segment should be substantial
B. to lead to more aggregating
C. to be unimportant as long as the segmenting dimensions are operational
D. to lead to a large number of small, but very homogeneous, product-market segments

29) ______________ focuses on introducing new products to existing markets.
A. Market development
B. Product development
C. Diversification
D. Market penetration

30) When a company grows globally by introducing existing product lines to new markets, this is an example of what?
A. Market development
B. Product development
C. Diversification
D. Market penetration

Multiple Choice Answers

1. The place where the ocean floor suddenly plunges downward is called the
A. continental shelf.
B. continental slope.
C. abyssal plain.
D. abyssal hill.

2. Which one of the following statements is accurate regarding glaciers and erosion?
A. Striations caused by moving glaciers help determine the age of a rock.
B. Glaciers erode the base of mountains into basins called cirques.
C. Moving valley glaciers create V-shaped valleys.
D. Glaciers can carry both small particles and large boulders.

3. The process that uses a half-life in its computation is
A. evolution.
B. adaptation.
C. intrusion.
D. radioactive dating.

4. Which one of the following times would be the longest?
A. Jurassic period
B. Carboniferous period
C. Paleozoic era
D. Mesozoic era

5. A _______ moraine forms when a glacier deposits till at its sides.
A. lateral
B. ground
C. end
D. terminal

6. The force that causes the ocean tides is
A. gravity.
B. the Coriolis effect.
C. tsunamis.
D. a swell.

7. Scientists believe that humans arrived on Earth during the _______ Period.
A. Quaternary
B. Tertiary
C. Cretaceous
D. Triassic

8. What must occur for a fossil to form?
A. The organism must fall into igneous rock.
B. The organism must be buried in sediment soon after it dies.
C. The organism must go through a process of petrification.
D. The climate where the organism dies must not be too cool.

9. According to the theory of evolution, an organism increases its chance of survival through a process known as
A. intrusion.
B. adaptation.
C. unconformity.
D. superposition.

10. In which one of the following regions would you expect to find the largest amounts of dissolved oxygen in the ocean water?
A. Near the equator
B. In temperate zones
C. In polar regions
D. In the deep ocean floor

11. Which one of the following landforms would be created by outwash?
A. Moraines
B. Eskers
C. Drumlins
D. Erratics

12. Which one of the following statements suggests relative age?
A. The top layer of sedimentary rock isn’t as old as the layers beneath it.
B. Earth was formed 4.6 billion years ago.
C. The Phanerozoic era lasted about 540 million years.
D. Some layers of shale are 265 million years old.

13. When sediments fall out of a glacier, they create a deposit called
A. kettle.
B. kames.
C. eskers.
D. till.

14. What problem does an unconformity present?
A. It weakens the crust so earthquakes are more prevalent.
B. It allows magma to escape to the surface of Earth.
C. It leaves a gap in the geological record.
D. It doesn’t contain any fossils for geologists to study.

15. The half-life of an element is important for determining the _______ of a rock.
A. decomposition rate
B. relative age
C. absolute age
D. mineral makeup

16. Which one of the following time references best fits the concept of geologic time?
A. A dozen years
B. A hundred years
C. A thousand years
D. A million or more years

17. Of the following mineral elements, which one is dissolved in greatest abundance in the world’s oceans?
A. Magnesium
B. Potassium
C. Calcium
D. Sodium

18. Which one of the following situations would you expect to create the highest waves in the ocean?
A. A 50-kilometer-per-hour wind blowing for 5 hours across a 100-kilometer-wide area of ocean
B. A 50-kilometer-per-hour wind blowing for 10 hours across a 1000-kilometer-wide area of ocean
C. A 100-kilometer-per-hour wind blowing for 5 hours across a 100-kilometer-wide area of ocean
D. A 100-kilometer-per-hour wind blowing for 10 hours across a 1000-kilometer-wide area of ocean

19. Alpine glaciers can be found on which one of the following landforms?
A. Flat plains
B. Mountain valleys
C. Mountain bases
D. Lowland hills

20. What drives currents deep in the ocean?
A. Wind
B. Increased temperatures
C. Differences in water density
D. Decreased salinity