Module 9

Question 1

If income and growth are both objectives, what should the investors invest in?

Answer 1

Blue Chip Stocks

High quality stocks

Question 2

If an investor wants preservation of capital, what should they invest in?

Answer 2

Passbook savings account
U.S. Savings bonds
T-Bills
Guaranteed investments

Question 3

If an investor wants income, what should they invest in?

Answer 3

Bonds

Question 4

What are municipal bonds not considered a good investment for?

Answer 4

IRAs and Pension plans

Question 5

For growth objective, what should the investors invest in?

Answer 5

Equities
Stocks

120 - age = % of equity

Question 6

What is the formula for the Balance Sheet?

Answer 6

Assets = Liabilities + Net Worth

Net Worth = Assets - Liabilities

Question 7

What is the formula for the basic Income Statement?

Answer 7

Income - Expenses = Discretionary Income

Discretionary Income is also called “Cash Flow”

Question 8

What is the formula for Cash Flow?

Answer 8

Cash Flow = Net Income (minus taxes) + Depreciation

Question 9

What are the limitations for S-corporation?

Answer 9

• 100 shareholders or less
• Only one class of stock may be issued
• Corporation or partnership cannot be shareholders of S-corporation
• All shareholders must be U.S. residents