62) Government of Canada Treasury Bills mature in 1 year or less.
Answer: True False
63) Liquidity is the ability to convert an investment into cash quickly with little or no loss of value.
Answer: True False
64) Short- term investments generally provide liquidity, safety, and a high rate of return.
Answer: True False
65) Money market accounts, certificates of deposit, bonds and commercial paper are all forms of short- term
investment vehicles.
Answer: True False
66) Investors can use short-term securities as a temporary place to "park" funds before deciding where to invest the money
on a long-term basis.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
67) The primary risk associated with a short- term investment is
A) default risk. B) purchasing power risk.
C) economic risk. D) interest rate risk.
Answer: B
68) Short- term investments
I. provide liquidity.
II. fill an important part of most investment programs.
III. provide a high rate of return with low risk.
IV. provide resources for emergencies.
A) I and IV only B) II and IV only C) I, II and IV only D) I, II, III and IV
Answer: C
69) Which of the following short-term investments provide the most liquidity?
A) money market mutual funds B) a chequing account
C) a corporate bond D) a guaranteed investment certificate
Answer: B
70) Canada Deposit Insurance Corporation (CDIC) insures up to $100,000 per account for
A) deposits in Savings Accounts.
B) chequing and savings accounts in Credit Unions.
C) deposits in Chequing Accounts.
D) all of the above.
Answer: D
71) Which of the following has the lowest level of risk?
A) banker's acceptance B) commercial paper
C) Treasury bill D) money market mutual fund account
Answer: C
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
72) Certified Financial Planners typically manage institutional portfolios.
Answer: True False
73) A major goal of corporate financial management is to increase the value of the firm to investors.
Answer: True False
74) Stringent regulations and vigorous enforcement have all but eliminated unethical behaviour by financial
professionals in recent years.
Answer: True False
75) Insurance companies invest the premiums and fees collected from customers to neutralize the risks assumed
from their clients.
Answer: True False
76) Chartered Financial Analyst (CFA) is a degree offered by several prestigious business schools.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
77) Funds that merely track a broad index and make no attempt to identify undervalued or exceptional growth
stocks are known as
A) passively managed funds. B) equity funds.
C) actively managed funds. D) hedge funds.
Answer: A
78) Jobs in which of the following fields require an understanding of the investment environment?
I. commercial banking
II. corporate finance
III. financial planning
IV. insurance
A) I and IV only B) I, II and IV only C) II, III and IV only D) I, II, III and IV
Answer: D
79) A major function of investment banking firms is
A) providing financial planning services to wealthy individuals.
B) assisting businesses when they issue stocks and bonds.
C) developing investment strategies to neutralize risk.
D) All of these are major functions of investment banking firms.
Answer: D
80) Which of the following has set an outstanding example of ethical behaviour in the financial professions?
A) Ramalinga Raju of Satyam Computers B) Hank Greenberg of AIG
C) Bernard Madoff of Madoff Securities D) none of the above
Answer: D
81) In Canada, the most prestigious designation for financial planners is
A) IA. B) CPA. C) CFP. D) CLU.
Answer: C
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
82) Briefly describe three different career paths that require a strong background in investments.
Answer: Students may discuss any of the following career paths. Answers will vary.
Responsibilities of commercial bankers may include portfolio management, managing short- term
securities, and advising individuals as personal bankers.
Corporate financial managers must raise external funds through the debt and equity markets, manage
short- term investments, and understand investor expectations for their business.
Financial planners assist individuals in choosing the investments that will help them meet their short-
and long- term goals.
The insurance industry employs professionals to invest and manage the large sums collected from