Desktop version

Home arrow Law arrow EXAM REVIEW 2015


All investors want to make or preserve money. However, these objectives can be achieved in different ways. Some of the different investment objectives are:

• Income

• Growth

• Preservation of capital

• Tax benefits

• Liquidity

• Speculation


Many investors are looking to have their investments generate additional income to help meet their monthly expenses. Some investments that will help to meet that objective are:

• Corporate bonds

• Municipal bonds

• Government bonds

• Preferred stocks

• Money market funds

• Bond funds


Investors who are seeking capital appreciation over time want their money to grow in value and are not seeking any current income. The only investments that will achieve this goal are:

• Common stocks

• Common stock funds


People who have preservation of capital as an investment objective are very conservative investors and are more concerned with keeping the money they have saved. For these investors, high-quality debt will be an appropriate recommendation. Investment choices that will achieve this include:

• Money market funds

• Government bonds

• Municipal bonds

• High grade corporate bonds


For investors seeking tax advantages, the only two possible recommendations are:

• Municipal bonds

• Municipal bond funds


Investors who need immediate access to their money need to own liquid investments that will not fluctuate wildly in value in case they need to use the money. The following is a list from the most liquid to the least liquid:

• Money market funds

• Stocks/bonds/ mutual funds

• Annuities

• Collateralized mortgage obligations

• Direct participation programs

• Real estate


A customer investing in a speculative manner is willing to take a high degree of risk in order to earn a high rate of return. Some of the more speculative investments are:

• Penny stocks

• Small cap stocks

• Some growth stocks

• Junk bonds

< Prev   CONTENTS   Next >

Related topics