Podcast 5 - Trivia Quiz 3

Get the answers to Trivia Quiz 2 and the new questions for this weeks podcast.

WealthGrow - By Wharton Investment Consultants 5010 Canby Drive, Wilmington DE 19808 Tel: 302-239-2111

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Transcript

[00:00:01] Speaker 1: Welcome to Wealth Grow, presented to you by Wharton Investment Consultants. [00:00:05] Speaker 1: I'm your host for today, Stuart Cameron, [00:00:08] Speaker 1: OSJ branch manager and financial adviser. [00:00:12] Speaker 1: So let's get started in today's exciting podcast, [00:00:16] Speaker 1: another trivia quiz. [00:00:18] Speaker 1: Firstly, [00:00:19] Speaker 1: let's reveal the answers to trivia quiz 2. [00:00:25] Speaker 1: Question 1. [00:00:27] Speaker 1: What is the maximum annual contribution limit for a Roth IRA [00:00:32] Speaker 1: in 2024 [00:00:34] Speaker 1: for individuals [00:00:35] Speaker 1: under age 50? [00:00:37] Speaker 1: The answer was c, [00:00:39] Speaker 1: 7,000. [00:00:42] Speaker 1: Question 2. [00:00:43] Speaker 1: Which type of bond is considered the safest [00:00:47] Speaker 1: as it's backed by the full faith and credit of the US government? [00:00:52] Speaker 1: The answer was d, [00:00:54] Speaker 1: treasury [00:00:56] Speaker 1: Bonds. Question 3. [00:00:58] Speaker 1: In what year was the 401 k retirement plan introduced [00:01:03] Speaker 1: as part of the US tax code? [00:01:06] Speaker 1: The answer was c, [00:01:08] Speaker 1: 1978. [00:01:11] Speaker 1: Question 4. [00:01:12] Speaker 1: What is the term for an agreement that gives an investor the right, but not the obligation, [00:01:18] Speaker 1: to buy or sell a security [00:01:20] Speaker 1: at a specific price [00:01:22] Speaker 1: within a certain time frame? [00:01:24] Speaker 1: The [00:01:25] Speaker 1: answer is b, [00:01:27] Speaker 1: option. [00:01:29] Speaker 1: Question 5. [00:01:31] Speaker 1: Which financial ratio [00:01:33] Speaker 1: measures a company's ability [00:01:35] Speaker 1: to pay off its short term liabilities [00:01:38] Speaker 1: with its most liquid assets? [00:01:42] Speaker 1: The answer was b, quick ratio. [00:01:47] Speaker 1: Question 6, [00:01:48] Speaker 1: what is the primary distinction between active and passive investment management? [00:01:55] Speaker 1: The answer was a, [00:01:56] Speaker 1: active management tries to outperform the market [00:02:00] Speaker 1: while passive management [00:02:01] Speaker 1: tracks a market Index. [00:02:05] Speaker 1: Question 7, [00:02:06] Speaker 1: what does the term alpha [00:02:08] Speaker 1: represent in investing? [00:02:11] Speaker 1: The answer was c. [00:02:13] Speaker 1: The excess return of an investment [00:02:15] Speaker 1: relative to a benchmark [00:02:17] Speaker 1: Index. [00:02:20] Speaker 1: Question 8. [00:02:21] Speaker 1: Which accounting method recognizes [00:02:23] Speaker 1: revenues and expenses [00:02:26] Speaker 1: when they are incurred [00:02:28] Speaker 1: regardless of when cash is exchanged? [00:02:31] Speaker 1: The answer is b, [00:02:33] Speaker 1: accrual [00:02:34] Speaker 1: accounting. [00:02:36] Speaker 1: Question 9,[00:02:38] Speaker 1: in which economic theory [00:02:40] Speaker 1: does increasing government spending [00:02:43] Speaker 1: and lowering taxes [00:02:45] Speaker 1: stimulate demand, [00:02:47] Speaker 1: thus driving [00:02:48] Speaker 1: economic growth. [00:02:50] Speaker 1: The answer was b, [00:02:52] Speaker 1: Keynesian [00:02:53] Speaker 1: economics. [00:02:56] Speaker 1: And finally, question 10, what is a hedge fund primarily [00:03:00] Speaker 1: known for in the financial world? [00:03:04] Speaker 1: The answer is a, [00:03:06] Speaker 1: using leveraged [00:03:07] Speaker 1: strategies to maximize [00:03:09] Speaker 1: returns. [00:03:12] Speaker 1: Okay. Today's questions balance foundational [00:03:15] Speaker 1: financial [00:03:17] Speaker 1: knowledge [00:03:18] Speaker 1: with some real world practicalities. [00:03:21] Speaker 1: Good luck. [00:03:22] Speaker 1: We will reveal the answers in our next podcast in which we will increase the knowledge level of the questions we ask, [00:03:29] Speaker 1: so check back regularly. [00:03:32] Speaker 1: You can email your answers to us at whartonic@ceterranetworks [00:03:37] Speaker 1: dotcom. [00:03:39] Speaker 1: No cheating now. Make sure to leave Google out of this. [00:03:43] Speaker 1: Okay. On to today's 10 questions. [00:03:47] Speaker 1: These questions are more advanced, focusing on technical concepts [00:03:52] Speaker 1: in financial theory, [00:03:54] Speaker 1: investment strategies, [00:03:55] Speaker 1: and market mechanisms. [00:03:58] Speaker 1: Good luck. [00:04:01] Speaker 1: Question 1. [00:04:03] Speaker 1: What is the sharp sharp ratio [00:04:06] Speaker 1: used to measure in investing? [00:04:09] Speaker 1: Is it a, a stock's dividend yield? [00:04:13] Speaker 1: B, the risk adjusted return of an investment? [00:04:17] Speaker 1: B, the correlation between 2 assets? [00:04:21] Speaker 1: Or [00:04:22] Speaker 1: d, the beta of a portfolio? [00:04:26] Speaker 1: Question 2, [00:04:28] Speaker 1: which type of hedge fund strategy [00:04:30] Speaker 1: attempts to exploit pricing inefficiencies [00:04:34] Speaker 1: between related securities? [00:04:36] Speaker 1: Is it, [00:04:37] Speaker 1: a, event driven, [00:04:39] Speaker 1: b, global macro, [00:04:42] Speaker 1: c, long, [00:04:44] Speaker 1: short equity, [00:04:46] Speaker 1: or d, relative value? [00:04:51] Speaker 1: Question 3, [00:04:52] Speaker 1: what is the Modigliani [00:04:54] Speaker 1: Miller [00:04:55] Speaker 1: theorem [00:04:56] Speaker 1: primarily concerned with? [00:04:59] Speaker 1: A, the relationship between taxes and investment decisions, [00:05:05] Speaker 1: b, corporate debt and dividend policy, [00:05:08] Speaker 1: irrelevance in a Perfect market, [00:05:11] Speaker 1: c, asset pricing based on risk and return, [00:05:15] Speaker 1: or d, [00:05:17] Speaker 1: behavioral biases in financial markets. 4,[00:05:26] Speaker 1: price at which the holder of an option [00:05:29] Speaker 1: can buy or sell the underlying [00:05:32] Speaker 1: asset? [00:05:34] Speaker 1: Is it, a, premium, [00:05:36] Speaker 1: b, strike price, [00:05:38] Speaker 1: c, intrinsic value, [00:05:41] Speaker 1: or d, time value? [00:05:45] Speaker 1: Question 5. [00:05:46] Speaker 1: What is the maximum allowable debt to income, DTI ratio, [00:05:51] Speaker 1: for qualified mortgages [00:05:53] Speaker 1: under the US CFPB's [00:05:56] Speaker 1: rules? [00:05:58] Speaker 1: A, 36%, [00:06:00] Speaker 1: b, 43%, [00:06:03] Speaker 1: c, 50%, [00:06:05] Speaker 1: or d, 56%. [00:06:11] Speaker 1: Question 6. Which financial model is used to calculate the fair value of a stock based on dividends, [00:06:19] Speaker 1: growth rate, and required rate of return? [00:06:23] Speaker 1: Is it a, capital asset pricing mod model, [00:06:27] Speaker 1: CAPM? [00:06:29] Speaker 1: B, [00:06:30] Speaker 1: discounted cash flow, [00:06:32] Speaker 1: DCF? [00:06:34] Speaker 1: F, c, dividend discount [00:06:36] Speaker 1: model, DDM, [00:06:38] Speaker 1: or d, arbitrage [00:06:40] Speaker 1: pricing theory, [00:06:42] Speaker 1: APT. [00:06:45] Speaker 1: Question 7. [00:06:46] Speaker 1: Which international treaty established the framework for the exchange rate system [00:06:52] Speaker 1: and international monetary policy [00:06:55] Speaker 1: after World War 2? [00:06:58] Speaker 1: Was it, a, the Bretton Woods agreement, [00:07:01] Speaker 1: b, the Maastricht Treaty, [00:07:05] Speaker 1: c, the Plaza Accord, [00:07:07] Speaker 1: or, d, the Basel Accord? [00:07:12] Speaker 1: Question 8. [00:07:13] Speaker 1: What does the term 'contango' mean [00:07:16] Speaker 1: in the futures markets? [00:07:19] Speaker 1: A, a market where future prices [00:07:22] Speaker 1: are higher than the expected future spot price. [00:07:27] Speaker 1: B, [00:07:28] Speaker 1: a market where futures prices are lower than the expected future spot price, [00:07:34] Speaker 1: c, the difference between the futures price and the spot price, [00:07:39] Speaker 1: or d, [00:07:40] Speaker 1: the strategy of rolling over futures contracts. [00:07:46] Speaker 1: Question 9. [00:07:48] Speaker 1: In modern portfolio [00:07:50] Speaker 1: theory, [00:07:51] Speaker 1: what is the shape of the efficient frontier? [00:07:55] Speaker 1: Is it, a, a straight line? [00:07:58] Speaker 1: B, a parabola? [00:08:01] Speaker 1: C, an upward sloping curve? [00:08:04] Speaker 1: Or, d, a downward sloping curve? [00:08:09] Speaker 1: And finally, question 10, [00:08:11] Speaker 1: in bond pricing, what does duration [00:08:14] Speaker 1: measure? [00:08:15] Speaker 1: Is it, a, the length of time until a bond matures, [00:08:19] Speaker 1: b, the sensitivity [00:08:21] Speaker 1: of a bond's price to changes in interest rates,[00:08:25] Speaker 1: c, the coupon payments a bondholder [00:08:28] Speaker 1: receives annually, [00:08:30] Speaker 1: or, d, the expected return over the bond's life. [00:08:36] Speaker 1: Remember, you can email your answers to us at whartonic@ceterranetworks.com, [00:08:42] Speaker 1: or check back for the answers in our next podcast, [00:08:46] Speaker 1: which due to the holidays will be in January 2025. [00:08:51] Speaker 1: Remember, our team is always here to answer any questions you may have. [00:08:56] Speaker 1: These podcasts are brought to you by Wharton Investment Consultants. [00:09:00] Speaker 1: 5010 Canby Drive, Wilmington, Delaware [00:09:04] Speaker 1: 19808. [00:09:06] Speaker 1: Telephone, 302-239-2111. [00:09:12] Speaker 1: Some IRAs have contribution limitations [00:09:15] Speaker 1: and tax consequences for early withdrawals. [00:09:19] Speaker 1: For complete details, consult your tax adviser or attorney. [00:09:23] Speaker 1: To qualify for the tax fee, penalty free withdrawal or earnings, [00:09:27] Speaker 1: a Roth IRA must be in place for at least 5 years, [00:09:31] Speaker 1: and the distribution must take place after age 59a half or due to death, [00:09:36] Speaker 1: disability, [00:09:38] Speaker 1: or a first time home purchase [00:09:40] Speaker 1: up to $10,000 [00:09:42] Speaker 1: lifetime maximum. [00:09:44] Speaker 1: Depending on state law, Roth IRA distributions may be subject to state taxes. [00:09:51] Speaker 1: The return on principal value of Bonds fluctuate with changes in market conditions. [00:09:56] Speaker 1: If Bonds are not held to maturity, [00:09:59] Speaker 1: they may be worth less [00:10:01] Speaker 1: more or more than their original value. [00:10:05] Speaker 1: Securities and advisory services are offered through registered representatives [00:10:10] Speaker 1: of Seterra Advisor Networks LLC, [00:10:13] Speaker 1: member FINRA, and SIPC, [00:10:16] Speaker 1: a broker dealer and a registered investment adviser. [00:10:20] Speaker 1: Seterra is under separate ownership from any other named entity. [00:10:25] Speaker 1: The views depicted in this material are for information purposes only [00:10:30] Speaker 1: and are not necessarily those of Cetera Advisor Networks LLC. [00:10:35] Speaker 1: This should not be considered specific advice or recommendations [00:10:39] Speaker 1: for any individual. [00:10:41] Speaker 1: Neither Seterra Advisor Networks, LLC [00:10:45] Speaker 1: nor any of its representatives [00:10:46] Speaker 1: may give legal or tax advice. [00:10:50] Speaker 1: All investing in forms [00:10:52] Speaker 1: risks, including the possible loss of principal. [00:10:55] Speaker 1: There is no assurance that any investment strategy [00:10:59] Speaker 1: will be successful.