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CS 338 > Test 4 Review Chapters 11,12,13,14,15 > Flashcards

Test 4 Review Chapters 11,12,13,14,15 Flashcards

1
Q

The possibility that the investment will fail to pay a return to the investor.

A

Financial Risk

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2
Q

Income an investment generates from current income and capital gains.

A

Total Return

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3
Q

Money received while you own an investment, usually in the form of interest, rent, or dividends.

A

Current income

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4
Q

An increase in the value of an initial investment realized upon the sale of the investment.

A

Capital gain

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5
Q

A decrease in the value of an initial investment that is only realized if sold.

A

Capital Loss

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6
Q

An investors willingness to weather changes in security prices, that is, to weather market risk

A

Risk tolerance

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7
Q

Somebody who tends to dislike risk and is unable to put money into investments that seem risky unless the return is very high

A

Risk Adverse

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8
Q

An investors general tolerance for risk in investments, can be conservative, moderate, and aggressive based on the investors financial goals.

A

Investment Philosophy

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9
Q

A specific rate of return that a borrower agrees to pay the investor for use of the principal

A

Fixed income

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10
Q

shares of ownership such as common stock or preferred stock that focus on CG more than on income

A

Equities

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11
Q

A specific date on which a borrower agrees to repay the principal to the investor

A

Fixed maturity

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12
Q

The danger that your money will not grow as fast as inflation, thereby reducing your purchasing power in the future.

A

Inflation risk

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13
Q

The risk that a business will go bankrupt and cause ones investments to fail

A

Business failure risk

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14
Q

A type of fixed income ownership security in a corporation that pays fixed dividends

A

Preferred stock

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15
Q

An interest bearing certificate of long term debt

A

A bond

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16
Q

The date upon which the principal is returned to the bondholder

A

The maturity date

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17
Q

The total dollar market value of all of a company’s outstanding shares.

A

Market capitalization

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18
Q

Actual physical location for a market at which some securities prices are set by open outcry

A

Organized exchanges

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19
Q

An investment company that pools funds by selling shares to investors and makes diversified investments to achieve financial goals of income or growth or both

A

A mutual fund

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20
Q

An investment that issues redeemable shares that investors purchase directly from the fund

A

Open end mutual fund

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21
Q

A fund that issues a limited number of shares at inception and does not offer to buy them back

A

A closed end mutual fund

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22
Q

The per share value of a mutual fund

A

net asset value (NAV)

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23
Q

When an investor sell their shares of a mutual fund

A

Redeems

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24
Q

When there is an allowance for a mutual funds shareholders to swap dollar for dollar basis for shares of another mutual fund within a mutual fund family

A

Exchange privilege

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25
Q

A small amount charged to move money among funds within a mutual fund family

A

Exchange fees

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26
Q

An investment management company that offers a number of different funds to the investing public each with its own investment objectives or philosophies of investing

A

A Mutual Fund Family

27
Q

The allowance of a fund holder to name one or more beneficiaries so that the proceeds bypass probate proceedings if the original shareholder dies

A

Beneficiary designation

28
Q

A mutual fund that always charges a sales charge upon purchase.

A

Load Funds

29
Q

Funds that allow investors to purchase shares directly at the net asset value

A

A no load fund

30
Q

Annual fees that some no load fund companies deduct from a funds assets to compensate sales people and pay other expenses

A

12b-1 fees (distribution fees)

31
Q

A sales charge paid when an individual buys an investment, reducing the amount available to purchase fund shares

A

A Front-end-load

32
Q

A sales commission that is imposed only when shares are sold

A

Back-end load

33
Q

Similar to a deferred load but often much lower. used to reduce excess trading of fund shares.

A

Redemption charge/ exit fee

34
Q

Fees charged directly to investors for specific transactions such as purchases, redemptions, and exchanges

A

Shareholder fees

35
Q

Where do you get money to invest?

A

pay yourself first, save extra funds, get a part time job

36
Q

What are the two parts of an investors total return?

A

Current Income and Capital Gains

37
Q

The risk that the value of an investment will decline when overall prices decline

A

Deflation Risk

38
Q

Any costs associated to get an investment ready to be sold and any costs incurred to sell the investment. the largest cost is usually commissions

A

Transaction Costs

39
Q

The Price an investor pays to buy one share of a mutual fund

A

Net Asset Value

40
Q

What are 9 unique features of mutual funds

A 
Conveinance
Easy to buy and sell
Check writing and EFT 
Automatic reinvestment of income 
telephone and internet exchange privileges 
automatic investment 
easy establishment of retirement plans 
beneficiary designation.
41
Q

Who is eligible for medicare?

A

People age 65 +

42
Q

Which part of Medicare requires a monthly premium

A

Medicare Part B

43
Q

Medicare Part A covers?

A

Hospitalization

44
Q

Medicare Part B covers?

A

Supplementary health expense insurance

45
Q

Medicare Part D covers?

A

Prescriptions

46
Q

What are the 3 ways of addressing the financial burden of illness or injury?

A

Covering The Direct health care costs
Covering rehabilitative costs
Covering Lost Income

47
Q

What are two examples of a consumer driven health care plan

A

A high deductable health care plan

A Health Savings Account

48
Q

A government sponsored health care program for low income people that is funded by state and federal governments.

A

Medicaid

49
Q

What is the open enrollment period

A

A period of 1 month beginning in October each year during which people can make changes to your coverage under a group health plan. it is usually waived for family changes such as divorce.

50
Q

Typical health care plans cover:

A

Hospital room and board, surgeries, prescription drugs, doctors visits and diagnostic tests.

51
Q

The three types of policy limits are:

A

Item Limits, daily limits, and episode limits

52
Q

A clause that prevents one from collecting insurance benefits that exceed the actual loss suffered.

A

The coordination of benefits clause

53
Q

A type of policy that can be cancelled or changed by the plan provider but only at the time of expiration or renewal

A

An Optionally renewable policy

54
Q

A policy that cannot be cancelled as long as the policy holder continues to pay the premiums, the premiums can change

A

A Guaranteed renewable policy

55
Q

A policy that must remain in effect as long as the policy holder pays the premiums, the premiums cannot be changed

A

A Noncancelable policy

56
Q

The Consolidated Omnibus Budget Reconciliation Act of 1985 That provides Between job coverage

A

COBRA

57
Q

A type of insurance that provides income replacement if you are disabled

A

Disability income insurance

58
Q

Activities that serve as the criteria used to decide when the insured can claim long term benefits

A

Activities of Daily Living (ADLs)

59
Q

The smartest thing you can do wen buying life insurance

A

Buy term and invest the rest

60
Q

Three ways to meet the need to protect ones self from losses due to death

A

Use existing assets
Using government benefits
Use life insurance to cover the rest

61
Q

Two ways to calculate the amount of life insurance one needs are:

A

Multiple of earnings approach

actual needs approach

62
Q

The most important feature of any life insurance company

A

to be able to pay its obligations.

63
Q

HMO

A

Health maintenance organization

CS 338 (4 decks)

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