Financial Soundness and Investment Management Basics
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Questions and Answers

What financial instrument involves pooling of investors' money as evidenced by certificates issued by trustee banks?

  • Commercial Papers
  • Bonds
  • Mutual funds (correct)
  • Special Savings Deposit

    • Which investment option is considered a low-risk form of marketable securities and is made up of interest-bearing promissory notes issued by big firms?

  • Treasury Bills (T-bills)
  • Special Savings Deposit
  • Derivatives (correct)
  • Trust Investments

    • What refers to the right, but not the obligation, to buy or sell something at a specified price and time?

  • Real Estate
  • Shares of stocks
  • Options
  • Futures contracts (correct)

    • Which form of investment involves interest-bearing certificates of indebtedness issued by an organization?

    <p>Bonds</p> Signup and view all the answers

    What type of contracts involve commitments to trade a given asset at a set price on a fixed date?

    <p>Futures contracts</p> Signup and view all the answers

    Which investment option generally refers to diamonds due to their rarity and appreciation in value?

    <p>Precious Stones and metals</p> Signup and view all the answers

    Which of the following best describes an individual with limited financial resources?

    <p>They would prefer to invest in low-risk, fixed-income instruments like time deposits and treasury bills</p> Signup and view all the answers

    What is the primary purpose of laddered investing?

    <p>To align investment maturities with expected cash needs or planned expenses</p> Signup and view all the answers

    What best defines a short-term time horizon in investing?

    <p>1 year or less</p> Signup and view all the answers

    Which of the following is an example of an offensive investment?

    <p>Stock investments</p> Signup and view all the answers

    What is the primary responsibility of a portfolio manager?

    <p>Making investment decisions for an individual or entity</p> Signup and view all the answers

    How are financial markets typically classified?

    <p>Money markets and capital markets</p> Signup and view all the answers

    What type of bonds can be exchanged for other securities of the issuing company?

    <p>Convertible bonds</p> Signup and view all the answers

    Which bonds are subject to redemption by the issuing company before the maturity date?

    <p>Callable bonds</p> Signup and view all the answers

    What type of bonds have no periodic interest payments?

    <p>Zero coupon bonds</p> Signup and view all the answers

    Which bonds are considered risk-free investments?

    <p>Government securities</p> Signup and view all the answers

    What type of stocks can only be bought by Filipino citizens?

    <p>Class A stocks</p> Signup and view all the answers

    Which type of stocks are preferred by investors for their easy marketability?

    <p>Listed stocks</p> Signup and view all the answers

    What is the primary purpose of investment portfolio management?

    <p>To define investment objectives and adopt strategies to optimize results while considering risks</p> Signup and view all the answers

    According to the 'Rule of 72', what does the number 72 represent?

    <p>The number of years it takes to halve the purchasing power of a monetary unit</p> Signup and view all the answers

    What is the main difference between a savings account and a time deposit?

    <p>Savings accounts allow for immediate withdrawal of funds, while time deposits have a fixed length of deposit period</p> Signup and view all the answers

    What is the primary purpose of the 'Future Value of 1 After n Periods' concept?

    <p>To calculate the value of a single lump-sum investment over time</p> Signup and view all the answers

    What is the primary purpose of the 'Future Value of an Annuity of 1 for N Periods' concept?

    <p>To calculate the accumulated amount of periodic contributions or additional investments and the earnings</p> Signup and view all the answers

    How is 'Investible Cash' defined in the context of investment portfolio management?

    <p>The accumulated amount of periodic contributions or additional investments and the earnings</p> Signup and view all the answers

    What is the main purpose of credit securities?

    <p>To raise funds for the issuing corporation</p> Signup and view all the answers

    Which of the following is NOT a key factor to consider when investing in credit securities?

    <p>Dividend yield</p> Signup and view all the answers

    What is the main difference between long-term and short-term investment in bonds?

    <p>Short-term bonds can be sold on the stock exchange, while long-term bonds cannot</p> Signup and view all the answers

    Which type of bond is secured by the equipment of the issuing company?

    <p>Equipment trust bonds</p> Signup and view all the answers

    What is the main difference between straight bonds and serial bonds?

    <p>Straight bonds mature entirely at one time, while serial bonds mature in installments</p> Signup and view all the answers

    Which type of bond is secured by the securities invested in by the issuing company?

    <p>Collateral trust bonds</p> Signup and view all the answers

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