Which of the following would endure the most negative impact based on rising inflation:
Answer(s): C
Bonds show a far greater degree of vulnerability during inflationary times than do the other choices, which, historically, have fared well when the cost of goods and services has increased. Bondholders incur rising interest rates, which drive down the value of their investments. Furthermore, the interest paid on bonds also loses purchasing power during times of inflation
The formula Pn=P0(1+r)n is used to calculate:
The formula for future value of money projects what an investment will be worth at some given point in the future. The original principal amount(P0), interest rate (r) and the number of years for the interest to compound (Pn) are all important factors in the calculation
Which of the following investment vehicles would be best suited for someone with an aggressive risk tolerance?
Answer(s): A
An investor with an aggressive risk tolerance is comfortable with the rise and fall of markets and is willing to exchange potentially higher profits with a higher degree of risk. Small company funds, known as small-cap funds, are typically considered riskier because of their size and may often be start-ups
Sally''s long-time partner, Gene, has just passed away and Sally seeks advice from her trusted financial advisor, Lyn. Which of the following is NOT true regarding estates?
Answer(s): D
Without a will, the courts appoint an administrator to pay taxes, distribute assets and oversee the property. If this person has been named in a will, they are known as the executor. All of the other choices are correct with regard to estates
Jonathan Marks is a conservative investor and does not appreciate a great deal of risk. He likes socially-conscious companies that value diversity, health and human life. His financial advisor, Allan Reynolds, captures all of this information while conducting an interview to determine a suitable investment strategy for Jonathan''s IRA portfolio. Allan returns in one week with choices for Jonathan to consider. Allan may have missed his mark with at least one of his recommendations. Which of these would be an inappropriate investment, considering Jonathan''s personal investment philosophy and risk tolerance?
Since Jonathan Marks has a low tolerance for risk, he would definitely want to avoid investing in a hedge fund, no matter what type of businesses the fund invests in. Hedge funds come with a very high degree of risk in exchange for a potentially high return. All the other options shown would respect Mr. Marks' philosophical views and would also be appropriate for his retirement plan
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