PFM EXAM #5 FINAL EXAM
CORRECT 100%
401(k) plan - ANSWER a retirement savings plan sponsored by an employer. It lets
workers save and invest a piece of their paycheck before taxes are taken out. Taxes
aren't paid until the money is withdrawn from the account.
IRA - ANSWER Individual retirement account- a special account in which the employee
sets aside a portion of his or her income; taxes are not paid on the principal or interest
until money is withdrawn from the account. This can be in addition to company plan
Common Stock - ANSWER Basic form of ownership in a corporation; Represents a type
of stock that pays a variable dividend and gives holder voting rights
Preferred Stock - ANSWER a nonvoting share of ownership in a corporation that pays a
fixed dividend
Dividend - ANSWER The portion of corporate profits paid out to stockholders
Stock Split - ANSWER an increase in the number of outstanding shares of a company's
stock
face value - ANSWER Amount of principal due at the maturity date of the bond
Maturity date - ANSWER The date on which an investment becomes due for payment.
Mutual fund - ANSWER fund that pools the savings of many individuals and invests this
money in a variety of stocks, bonds, and other financial assets
Closed-end fund - ANSWER shares may not be redeemed, but instead are traded at
prices that can differ from net asset value
NASDAQ - ANSWER coolest and newest (techie)
S & P 500 - ANSWER 500 largest companies on the U.S. stock market, well known
DOW - ANSWER 30 biggest companies
Corporate Bonds - ANSWER bonds issued by corporations, to raise financing for a
variety of reasons such as to ongoing operations, M&A, or to expand business
Government Bonds - ANSWER a bond issued by a national government, generally with
a promise to pay periodic interest payments called coupon payments and to repay the
face value on the maturity date
CORRECT 100%
401(k) plan - ANSWER a retirement savings plan sponsored by an employer. It lets
workers save and invest a piece of their paycheck before taxes are taken out. Taxes
aren't paid until the money is withdrawn from the account.
IRA - ANSWER Individual retirement account- a special account in which the employee
sets aside a portion of his or her income; taxes are not paid on the principal or interest
until money is withdrawn from the account. This can be in addition to company plan
Common Stock - ANSWER Basic form of ownership in a corporation; Represents a type
of stock that pays a variable dividend and gives holder voting rights
Preferred Stock - ANSWER a nonvoting share of ownership in a corporation that pays a
fixed dividend
Dividend - ANSWER The portion of corporate profits paid out to stockholders
Stock Split - ANSWER an increase in the number of outstanding shares of a company's
stock
face value - ANSWER Amount of principal due at the maturity date of the bond
Maturity date - ANSWER The date on which an investment becomes due for payment.
Mutual fund - ANSWER fund that pools the savings of many individuals and invests this
money in a variety of stocks, bonds, and other financial assets
Closed-end fund - ANSWER shares may not be redeemed, but instead are traded at
prices that can differ from net asset value
NASDAQ - ANSWER coolest and newest (techie)
S & P 500 - ANSWER 500 largest companies on the U.S. stock market, well known
DOW - ANSWER 30 biggest companies
Corporate Bonds - ANSWER bonds issued by corporations, to raise financing for a
variety of reasons such as to ongoing operations, M&A, or to expand business
Government Bonds - ANSWER a bond issued by a national government, generally with
a promise to pay periodic interest payments called coupon payments and to repay the
face value on the maturity date
