Investment and Portfolio Management

Paper money and coins issued by the government

• Smart Cards
• Money
• Trust Services
• Currency

Interest coupons are attached to the bond certificates and interest is paid to the holder of said coupons → Yield on bonds

• True
• False

In an ______________ management service, the portfolio managers are actively involved in buying and selling of securities to ensure maximum profits to individuals

• active portfolio

Financial investment refers to putting aside a fixed amount of money and expecting some kind of gain out of it within a stipulated time frame.

• True
• False

What is inflation?

• The rise in the general level of prices.
• The number of times something happens to money.
• The uncertainty the return on an investment will deviate from what is expected.
• The projected value of an investment at the end of a specified time frame.

In a nutshell, treasury management is there to ensure that the business always has access to the cash required to operate and uses surplus cash without efficiency.

• True
• False

Personal property is transferred by a bill of sale

• True
• False

Match the missing word/details to complete each statement.

• portfolio management
• Portfolio managers understand the client’s ______________and suggest the best and unique investment policy for them with minimum risks involved.
• Answer 2
• financial needs
• Portfolio management presents the best investment plan to the individuals as per their income, ______________, age and ability to undertake risks.
• Answer 3
• budget
• In a ________________ management, the portfolio manager deals with a fixed portfolio designed to match the current market scenario.
• Answer 4
• passive portfolio
• If you plan to invest in property, ensure it is at a _____________ location and would have takers in the near future.
• Answer 5
• prime
• Make sure your __________________ is the best in the market and guarantees sufficient return in future.
• Answer 6
• investment plan
• Portfolio management minimizes the ___________ involved in investing and also increases the chance of making profits.
• Answer 7
• risks
• In an ______________ management service, the portfolio managers are actively involved in buying and selling of securities to ensure maximum profits to individuals
• Answer 8
• active portfolio
• A _________________ refers to a collection of investment tools such as stocks, shares, mutual funds, bonds, cash and so on depending on the investor’s income, budget and convenient time frame.
• Answer 9
• portfolio
• It is always advisable to issue an account payee ___________in favor of the company rather than giving cash to your advisor.
• Answer 10
• cheque

To institutional investors, preferred stock may be very attractive because:

• it provides balance to the issuing firm's capital structure
• dividend payments are assured
• dividends from another corporation are usually tax-exempt
• the preferred yield is normally higher than that of debt

Explore all the investment plans available in the __.

• market

Centralized and decentralized treasury departments refer to level of autonomy each regional branch of an Enterprise has in handling its own treasury operations.

• True
• False

Type of bank account from which withdrawals are made issuing checks

• Bank Accounts
• Debenture Bonds
• Savings Account
• Current Account

Land can be considered a fixture

• True
• False

The main purpose of a survey is to create or confirm a legal description

• True
• False

___________________ refers to managing an individual’s investments in the form of bonds, shares, cash, and mutual funds so that he earns the maximum profits within the stipulated time frame.

• portfolio management

Electronic machines that allows bank customers to conduct account-related activities 24/7

• International Monetary Fund (IMF)
• Automatic Teller Machines (ATM)
• Bank Rate (Rediscount Rate)
• Letter of Credit

In terms of decreasing return to the investor, the proper ranking would be:

• common stock, long-term government debt, preferred stock
• common stock, secured debt, treasury bills
• preferred stock, common stock, secured debt
• long-term government debt, common stock, preferred stock

The amortization period for corporation organization costs cannot exceed twenty years.

• True
• False

In terms of increasing risk to the investor, the proper ranking would be:

• common stock, preferred stock, secured debt
• long-term government debt, secured debt, preferred stock
• long-term government debt, subordinated debt, common stock
• secured debt, common stock, preferred stock

Preferred stock may be justified in that it:

• dividends are tax-deductible
• it is lower cost source of financing than debt
• really has no justification
• expands the capital base without diluting common equity

As regulation and technology in the financial sector changes, at an ever increasing pace, and the business landscape becomes increasingly there is more pressure bon corporates to efficiently manage cash.

• competitive

A corporation has no legal commitment to pay dividends until the board of directors takes formal action to declare a dividend.

• True
• False

The relationship between risk and return in investing can be stated as

• Higher risk indicates higher return
• No relationship exist between risk and return
• Lower risk indicates higher return
• Higher risks indicates lower return

Fixed-income investments

• Securities
• Fixed-income security
• Derivatives
• Individual investors

A diversified portfolio is desirable because it:

• Increases the risk/return ratio
• Indicates an investor is a good predictor of the return an investment will have
• Decreases risk by investing money in a variety of investment tools
• Limits investors choices to only one or two investment tools

Don’t just blindly trust your __. Read the terms and conditions and go through all the related documents carefully before signing.

• financial advisor

When a rights offering is announced:

• the share price increases when the stock goes ex-rights
• a stock will initially trade rights-on
• common shareholders may purchase one new share for each share owned
• the shareholder increases the value of his holdings by exercising the rights

Which of the following marketable securities is the obligation of a commercial bank?

• T-bills
• Commercial paper
• Negotiable certificate of deposit
• Repurchase agreement

Is a certificate of indebtedness with fixed interest rate and maturity date

• True
• False

Type of bank account wherein deposits thereto and withdrawals there from can be made anytime

• Savings Account for investment purposes
• Current Account
• Treasury Bonds
• Savings Account

Shareholders' equity is made up of the total contributed capital plus retained earnings.

• True
• False

It is always advisable to issue an account payee ___________in favor of the company rather than giving cash to your advisor.

• cheque

Conner wants to purchase stocks with the money he received from his tax return. Who would he contact to make the transactions?

• Any of the above
• A depository institution
• A brokerage firm
• The New York Stock Exchange

In some cases the 'double taxation' of corporations can be advantageous

• True
• False

The bank pays you a slightly higher fixed rate of interest. In return, you must keep a minimum amount deposited.

• Money Market Accounts
• Short-term Bond Funds
• Money Market Funds
• Certificates of Deposit

The most basic requirement for a firm's marketable securities.

• Safety
• Bills
• Marketability
• Yield

These are mutual funds that invest in a variety of short-term investments.

• Certificates of Deposit
• Short-term Bond Funds
• Money Market Funds
• Money Market Accounts

__ ensures all your dreams turn real and you enjoy life to the fullest without actually worrying about the future.

• financial investment

Under a pre-emptive right provision:

• common shareholders have a pre-emptive right to dividends
• dilution of existing positions is encouraged
• holders of common stock must be given the first option to purchase new shares
• preferred shareholders have the first option on new common shares

Authorized shares refer to the shares the corporation has issued.

• True
• False

A life tenant owns the property forever

• True
• False

As the owners of the firm, common shareholders:

• have the right to vote on all important corporate issues
• play a secondary role in financing the firm
• have a primary claim on earnings
• have a legally enforceable right to dividends

Shareholders have unlimited liability.

• True
• False

Factors to consider in investing in credit securities

• Time Deposit
• Limitations as to withdrawals , Interest rate, Minimum balance required, Insurance and Bank reputation
• Date of maturity or call, Interest rates, Yield on the security, Credit rating on the issuing party, Value of the security, Credit rating of the trustee, Credit rating of the underwriter
• Collateral trust bonds

Investment is nothing but goods or commodities purchased today to be used in future or at the times of festivities.

• True
• False

Water rights do not include the right of access.

• True
• False

These products earned super-low interest rates. To gain a higher yield

• Fixed-income security
• Individual Investors
• Derivatives
• Securities

Which of the following is true in regards to investing in stock?

• A stock investor owns a part of a company
• All of the above
• A stock investor may or may not receive a profit
• A stock investor may receive a dividend

Ultimate control of a corporation rests with the shareholders, not the board of directors.

• True
• False

Issuing preferred shares to increase the return to common shareholders is called financial leverage.

• True
• False

Preferred shares that have the right to be exchanged for common shares of the issuing corporation, at the option of the preferred shareholders, are known as cumulative preferred shares.

• True
• False

A promise by a bank to pay for money to a business firm if certain conditions are met

• Venture Capital Firm
• Letter of Credit
• Banker's Acceptance
• Smart Cards

Is an important umbrella term which encompasses several functions involved in managing an enterprise's holdings?

• Treasury management

A privately owned, profit-seeking firm that serves individuals, non-business organizations, and businesses as a financial intermediary → Chartered Bank

• True
• False

Treasury bills, notes, and bonds are

• Treasury Inflation-Protected Securities
• fixed-income investments
• fixed-income security
• Both A & B correct

Portfolio management presents the best investment plan to the individuals as per their income, ______________, age and ability to undertake risks.

• budget

Liquidity is an economic characteristic of land

• True
• False

A blue chip stock is associated with a company:

• With a consistent record of relatively rapid growth and earnings
• With a spotty earnings pattern but potential for substantial earnings in the future
• Which dominates its respective industry and has a good company management reputation
• With a steady stream of income paying high dividends and retaining only a small portion of profits

In order to pay a cash dividend, a corporation must have adequate cash and adequate retained earnings.

• True
• False

Portfolio management minimizes the ___________ involved in investing and also increases the chance of making profits.

• risks

If you plan to invest in property, ensure it is at a _____________ location and would have takers in the near future.

• prime

Only the most liquid forms of money (currency and demand deposits) → M-1

• True
• False

An estate measured by the life of a designated person is free and absolute

• True
• False

Appoint a good financial planning __ who takes care of all your investment needs.

• manager

Preferred shares that have the right to share in dividends above the fixed rate or amount stated on the share certificate are known as participating preferred shares.

• True
• False

A growth stock is associated with a company:

• Which dominates its respective industry and has a good company management reputation
• With a steady stream of income paying high dividends and retaining only a small portion of profits
• With a spotty earnings pattern but potential for substantial earnings in the future
• That is new with a consistent record of relatively rapid growth and earnings

The call price or redemption value of preferred shares is often below the par value of the shares.

• True
• False

Careful analysis and focused approach are mandatory before any kind of investment.

• True
• False

Real Estate includes land, improvement and rights.

• True
• False

Track the performance of a bond index. They aren't actively managed like a mutual fund. Bond ETFs are popular because they have low costs.

• Exchange Traded Funds
• Savings Accounts
• Short-term Bond Funds
• Certificates of Deposit

Shareholders must be present at annual shareholder meetings to elect the members of the board of directors.

• True
• False

All income not paid out to creditors or preferred shareholders:

• automatically belongs to common shareholders
• is paid out as common stock dividends
• is subject to a higher federal income tax rate
• is distributed as interest to bondholders

What is a bond?

• A type of Certificate of Deposit with a higher than average interest rate
• A share of ownership in a company
• A type of debt that a company issues to investors for a specified amount of time
• A type of investment that is only offered by depository institutions

Preferred shares are guaranteed cash dividends.

• True
• False

An underwriter will purchase an issuance of shares directly from the issuing corporation at an amount equal to the probable market value of the shares to shareholders.

• True
• False

This low risk means they have the lowest interest rates of any.

• Treasury Inflation-Protected Securities
• Fixed-income security
• Certificates of deposit
• Fixed-income investments

Which of the following investment tools is considered to be a speculative investment?

• Futures
• Savings Bond
• Mutual Fund
• Real Estate

One instituted by the Bureau of Treasury to sell Small Denominated Treasury Bills ( SDT-Bills ), SDT-bonds and US Dollar Savings Bonds to improve the affordability of these securities to small savers → Small Investors Program

• True
• False

The ultimate ownership of the firm resides:

• with bondholders
• with management
• with preferred shareholders
• with common shareholders

The responsibility for making sure that this strategic management is carried out effectively falls to the business' treasury department, who must plan, organize and control the cash assets.

• money

Minimum term in the Philippines of time deposits so that the depositor may roll over his account monthly when he intends to keep his money and all its earnings in account

• One month
• Yield on bonds
• Money market
• One year

Mineral rights are rarely separated from surface rights, so they are typically conveyed to the buyer.

• True
• False

Portfolio theory helps portfolio managers to calculate the amount of return as well as risk for any investment portfolio.

• True
• False

Make sure your __________________ is the best in the market and guarantees sufficient return in future.

• investment plan

In a ________________ management, the portfolio manager deals with a fixed portfolio designed to match the current market scenario.

• passive portfolio

Portfolio managers understand the client’s ______________and suggest the best and unique investment policy for them with minimum risks involved.

• financial needs

We assist companies to access trade and receivables through our relationships with 270+ banks funds and alternative finance houses.

• finance

The most common are pensions, bonds, and loans. Fixed income also includes.

• Fixed-income investments
• Securities
• Certificates of deposit
• Derivatives

Financial investment controls an individual’s __ pattern.

• spending

Treasury management and are two terms which are sometimes interchangeably particularly by smaller enterprises, but do, in fact perform separate functions.

• cash management

Building codes differ for electric and plumbing and based on the type of property

• True
• False

These mutual funds invest in one-year to four-year low-risk bonds. Most of their holdings are corporate bonds.

• Money Market Funds
• Short-term Bond Funds
• Money Market Accounts
• Certificates of Deposit

A preferred issue carrying a call provision will carry:

• a higher yield than non-callable preferred
• the same yield as non-callable preferred
• a lower yield than non-callable preferred
• the same yield as callable debt

Refer to the trading of long -term securities such as bonds and shares of capital stock

• Primary Market
• Time Deposit
• Capital Market
• Redeemable Bonds

The value of a stock can change when:

• A stock split occurs
• Dollar value of a stock increases or decreases
• All of the above
• A merger happens between two companies

The lowest rate charged to borrowers → Bank Rate (Rediscount Rate)

• True
• False

Shares do not have to have a par value

• True
• False

Investing because your friend has said you to do so is a good business move.

• True
• False

Preferred equity has all of the following characteristics except:

• residual claim to income
• fixed dividends
• precedence over common stock dividends
• the cumulative right to annual dividends

Treasury Management is a key component of business operations in any enterprise.

• True
• False

. In a centralized model, only few of the treasury operations of the different regional branches of a multinational company are controlled by a branch location.

• True
• False

Preferred shareholders:

• have a subordinated claim to dividends
• normally have no vote on corporate issues
• play a primary role in the financing of the firm
• possess an ownership interest in the firm

Classification of bonds As to transferability → Bearer bonds

• True
• False

The right of shareholders to purchase additional shares of common share issued by the corporation is called the preemptive right.

• True
• False

All of the following are advantages of rights offerings except:

• a rights offering provides the firm with a built-in securities market
• more interest may be generated in the market
• the position of current shareholders is protected
• the dollar value of rights traded on exchanges is very high

Classification of bonds as to security → Straight bonds

• True
• False

A _________________ refers to a collection of investment tools such as stocks, shares, mutual funds, bonds, cash and so on depending on the investor’s income, budget and convenient time frame.

• portfolio

The most important voting issue for common shareholders is:

• proxy assignment
• dividend policy
• election of the board of directors
• adoption of the annual report