FREE Principles of Investment Questions and Answers

Question 1

What is the real interest rate if the nominal interest rate is 4.00% and the inflation rate is 2.25%?

Accepted Answer

1.75%

Answer

1.25%

Answer

1.00%

Answer

1.85%

Question 2

Low- and medium-risk investments are more popular than high-risk investments because they

Accepted Answer

it decreases the value of money.

Answer

stated

Answer

low risk.

Question 3

What happens as a result of inflation over time?

Accepted Answer

Interest becomes worth less money.
The dollar's future value changes.

Answer

predictability

Answer

It decreases the value of money.

Answer

increased interest rates
decreased borrowing
decreased investing

Question 4

The best way to define the nominal interest rate is as the rate.

Accepted Answer

stated

Answer

real

Answer

implicit

Answer

islam

Question 5

What is the definition of "before-tax cash flow"?

Accepted Answer

Cash flow before taking income taxes into account.

Answer

What is the definition of "before-tax cash flow"?

Answer

Cash flow before property taxes are considered.

Answer

Cash flow taking income taxes into account.

Question 6

In order for a company to qualify for a school exemption under the Texas Economic Development Act, which of the following must be true?

Accepted Answer

The tax exemption must be a deciding factor in the company's decision to do business in Texas.

Answer

The company must agree to pay back the school taxes over a period of seven years.

Answer

The company must prepay all school property taxes for the first two years of the eligibility period

Answer

The company must currently pay more than $20,000 in annual property taxes.

Question 7

What provision would be in the lease if the landlord wanted to inform the tenant that the rented property was backed by a mortgage?

Accepted Answer

Subordination clause

Answer

Mortgage clause

Answer

Subjective clause

Answer

Use clause

Question 8

Which of the following is subject to Securities and Exchange Commission regulations?

Accepted Answer

Syndicates

Answer

LLCs

Answer

Partnerships

Answer

LLPs

Question 9

What does I stand for in the capitalization formula?

Accepted Answer

Income

Answer

Impact

Answer

Interest

Answer

Investment

Question 10

Hester has been looking for single-family homes on the outskirts of a business district and has been attending local planning meetings. Hester wants to invest, but what kind of opportunity?

Accepted Answer

A home targeted for rezoning

Answer

A conversion

Answer

A historic property

Answer

A fixer-upper