Module 3 Financial Planning

Which item should be placed in the liabilities section on a company balance sheet?

• cash
• buildings
• inventory
• employee wages

Which individual does in-depth work on formulating investment strategies for clients, helping them fulfill their needs, and reaching their financial goals?

• financial planner
• investment banker
• financial consultant
• mutual fund manager

Which person will analyze, interpret, and process a wide variety of transactions, and be aware of their impact to assets on behalf of a beneficiary?

• financial planner
• investment banker
• trust operations specialist
• securities operations specialist

Which is a poor way to find companies in which to invest?

• Read reputable investment magazines and newspapers
• Discuss investment opportunities with family and friends.
• Follow suggestions in unsolicited e-mails and phone calls.
• Investigate businesses that have interesting products and services.

An individual who often works as part of a financial institution and is primarily concerned with raising capital for corporations, governments, or other entities is called a/an:

• market consultant.
• investment banker.
• mutual fund manager.
• securities sales agent (broker).

Which statement is false about using a buy-and-hold strategy?

• Assets need only passive management.
• Stocks must be carefully monitored.

• There are tax benefits for this method.
• Price fluctuations can be ignored.

Which is an important business factor to consider when choosing an investment?

• time horizon
• risk tolerance
• minimization of taxes
• comparison to competition

Which best describes a marketable bond?

• one that is bought and sold in the open market
• one that later becomes a stock at a market
• one that comes from a governing body
• one that is paid back before maturity

Too much diversification in a financial portfolio can:

• dilute the value of big gains on an individual stock.
• cause other investors to avoid a particular stock.
• keep stock fund managers from doing their jobs.

Which statement is true about assessing the fundamentals of a security?

• Fundamental analysis results in a reliable prediction of the stock price for the next year.
• Fundamental analysis is a complicated procedure that is inappropriate for beginning investors
• Even investment experts disagree about the most important ratios to consider in fundamental analysis.
• The only valid approach to fundamental analysis is based on the work of investment guru Warren Buffett.