IFIC Chapter 8 questions and answers
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Rank the three basic securities on risk factor from least to greatest - correct answer ✔✔T-Bills, Bonds,
Equities
Real rate of return - correct answer ✔✔The return adjusted for inflation
Nominal return - correct answer ✔✔Return not adjusted for inflation
Purchasing power - correct answer ✔✔the ability to buy goods and services
What are the three types of investment returns? What are some examples of each? - correct answer
✔✔1. Interest income - T Bills, bonds, money market mutual funds
2. Dividend Income - Common and Preferred Shares.
3. Capital Gains - Selling an investment for more than the price paid.
What is the highest taxed investment return? - correct answer ✔✔Interest Income - taxed at the same
rate as your income from employment.
Holding Period Return - correct answer ✔✔The return if the transaction period is longer or shorter than
a year.
Definition: Average or mean - correct answer ✔✔The calculation of the return on two investments over
many holding periods.
What are the three measurements of risk? - correct answer ✔✔Variance, standard deviation, and beta.
rated A+
Rank the three basic securities on risk factor from least to greatest - correct answer ✔✔T-Bills, Bonds,
Equities
Real rate of return - correct answer ✔✔The return adjusted for inflation
Nominal return - correct answer ✔✔Return not adjusted for inflation
Purchasing power - correct answer ✔✔the ability to buy goods and services
What are the three types of investment returns? What are some examples of each? - correct answer
✔✔1. Interest income - T Bills, bonds, money market mutual funds
2. Dividend Income - Common and Preferred Shares.
3. Capital Gains - Selling an investment for more than the price paid.
What is the highest taxed investment return? - correct answer ✔✔Interest Income - taxed at the same
rate as your income from employment.
Holding Period Return - correct answer ✔✔The return if the transaction period is longer or shorter than
a year.
Definition: Average or mean - correct answer ✔✔The calculation of the return on two investments over
many holding periods.
What are the three measurements of risk? - correct answer ✔✔Variance, standard deviation, and beta.
