FNCE Actual Exam with Questions with Verified
Answers | Already Passed
How does your risk tolerance influence what you would purchase in your account? How does it
influence your Investment Policy Statement? - ✔✔if you want more risk your profilio will
consist of totally different stocks with much more versatility.
How is risk and return related? - ✔✔higher the risk the higher the possible return
What is a market order and how is it different from a limit order? - ✔✔market orders are
meant to execute as quickly as possible at the current market price, while limit orders are
meant to specify a price at which an investor is willing to buy or sell.
What is dollar cost averaging and how does it apply to investing in stocks? Please know how to
calculate it. - ✔✔means that you regularly invest the same amount of money (e.g., $100)
over time in stocks, mutual funds, or ETFs, no matter what the price is. The dollar cost
averaging formula is Average Price Paid Per Share = Amount Invested / Number of Shares
Owned.
How is FDIC insurance different from SIPC? - ✔✔SIPC insurance helps protect assets in a
brokerage account (such as stocks, bonds, and ETFs), whereas the FDIC insures money you have
in a deposit account with a financial institution.
How should you choose a financial advisor? - ✔✔based on personal preference of what you
are trying to achive
What is an emergency fund and how would you calculate it? - ✔✔Add up essential living
expenses for one month and multiply that amount by either three or six
What is a Target Date Mutual fund? What are the advantages and disadvantages of it? -
✔✔Target-date funds provide a simple way to save for retirement. They offer exposure to a
, variety of markets, active and passive management, and a selection of asset allocation. Despite
their simplicity, investors who use target-date funds need to stay on top of asset allocation,
fees, and investment risk.
.In class we practiced reading Morningstar Reports. On the exam, I will give you a very
simplified sample table that mimics the exercise we did in class and ask you to interpret it. -
✔✔look over morning star
What is market capitalization and how do you calculate it? - ✔✔refers to the total value of
all a company's shares of stock. It is calculated by multiplying the price of a stock by its total
number of outstanding shares. For example, a company with 20 million shares selling at $50 a
share would have a market cap of $1 billion.
. What is the relationship between interest rates and bond prices? - ✔✔Bond prices have an
inverse relationship with interest rates. This means that when interest rates go up, bond prices
go down and when interest rates go down, bond prices go up.
ex: 1000 bond with 6% interest. ----->>>> if the interest rate rises to 10% why would anyone pay
that 1000 for a 6% bond, it is worth less
What are the advantages of IRAs and 401ks? - ✔✔go over
Please know the differences between a corporate bond, a Treasury bond, an I bond and a
municipal bond. - ✔✔Corporate bonds are issued by companies. Companies issue bonds—
rather than seek bank loans for debt financing in many cases—because bond markets offer
more favorable terms and lower interest rates. Municipal bonds are issued by states and
municipalities. Some municipal bonds offer tax-free coupon income for investors. government
debt securities issued by the U.S. Federal government that have maturities greater than 20
years.
What are the advantages and disadvantages of stocks, bonds and cash? - ✔✔Stocks offer an
opportunity for higher long-term returns compared with bonds but come with greater risk.
Bonds are generally more stable than stocks but have provided lower long-term returns. By
Answers | Already Passed
How does your risk tolerance influence what you would purchase in your account? How does it
influence your Investment Policy Statement? - ✔✔if you want more risk your profilio will
consist of totally different stocks with much more versatility.
How is risk and return related? - ✔✔higher the risk the higher the possible return
What is a market order and how is it different from a limit order? - ✔✔market orders are
meant to execute as quickly as possible at the current market price, while limit orders are
meant to specify a price at which an investor is willing to buy or sell.
What is dollar cost averaging and how does it apply to investing in stocks? Please know how to
calculate it. - ✔✔means that you regularly invest the same amount of money (e.g., $100)
over time in stocks, mutual funds, or ETFs, no matter what the price is. The dollar cost
averaging formula is Average Price Paid Per Share = Amount Invested / Number of Shares
Owned.
How is FDIC insurance different from SIPC? - ✔✔SIPC insurance helps protect assets in a
brokerage account (such as stocks, bonds, and ETFs), whereas the FDIC insures money you have
in a deposit account with a financial institution.
How should you choose a financial advisor? - ✔✔based on personal preference of what you
are trying to achive
What is an emergency fund and how would you calculate it? - ✔✔Add up essential living
expenses for one month and multiply that amount by either three or six
What is a Target Date Mutual fund? What are the advantages and disadvantages of it? -
✔✔Target-date funds provide a simple way to save for retirement. They offer exposure to a
, variety of markets, active and passive management, and a selection of asset allocation. Despite
their simplicity, investors who use target-date funds need to stay on top of asset allocation,
fees, and investment risk.
.In class we practiced reading Morningstar Reports. On the exam, I will give you a very
simplified sample table that mimics the exercise we did in class and ask you to interpret it. -
✔✔look over morning star
What is market capitalization and how do you calculate it? - ✔✔refers to the total value of
all a company's shares of stock. It is calculated by multiplying the price of a stock by its total
number of outstanding shares. For example, a company with 20 million shares selling at $50 a
share would have a market cap of $1 billion.
. What is the relationship between interest rates and bond prices? - ✔✔Bond prices have an
inverse relationship with interest rates. This means that when interest rates go up, bond prices
go down and when interest rates go down, bond prices go up.
ex: 1000 bond with 6% interest. ----->>>> if the interest rate rises to 10% why would anyone pay
that 1000 for a 6% bond, it is worth less
What are the advantages of IRAs and 401ks? - ✔✔go over
Please know the differences between a corporate bond, a Treasury bond, an I bond and a
municipal bond. - ✔✔Corporate bonds are issued by companies. Companies issue bonds—
rather than seek bank loans for debt financing in many cases—because bond markets offer
more favorable terms and lower interest rates. Municipal bonds are issued by states and
municipalities. Some municipal bonds offer tax-free coupon income for investors. government
debt securities issued by the U.S. Federal government that have maturities greater than 20
years.
What are the advantages and disadvantages of stocks, bonds and cash? - ✔✔Stocks offer an
opportunity for higher long-term returns compared with bonds but come with greater risk.
Bonds are generally more stable than stocks but have provided lower long-term returns. By
