For tax purposes, money fund dividends are recognized as

A. interest payments.

B. a capital gain distribution.

C. a deductible item for federal income tax purposes.

D. a deductible loss if interest not earned prior to maturity is never realized.

2

John Smith, one of your clients, has asked you about the wisdom of investing $25,000 of his funds in a certificate of deposit at his bank. In your advice to him, which of the following characteristics of typical small CDs should you point out?

A. The availability of an active secondary market

B. The option to redeem the CD prior to maturity, without penalty

C. The protection provided by the Federal Deposit Insurance Corporation

D. The requirement of a minimum investment of $100,000

3

Which of the following instruments is not traded in a money market?

A. Bankers acceptances

B. Government Treasury Bills

C. Long-term Bonds

D. Repurchase Agreements

4

Five years ago John paid $24.50 a share for 100 shares of Sunshine Financial Services, Inc.. During that time he received 20 equal quarterly dividends of $0.16 a share. Today, the stock is worth $38.00 a share. Whats the Holding Period Return?

A. $6.82

B. 68 percent

C. 6.2 percent

D. 55.1 percent

5

Which of the following are short-term financial instruments?

A. A negotiable Certificate of Deposit

B. A bankers acceptance

C. A U.S. Treasury bill

D. All of the above