Choose wisely. There is only one correct answer to each question.
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1.
To determine how profitable a company is, you can examine its cash flow.
False. Cash flow does not tell you much about profitability. The metric you want is return on assets, which measures how well a company uses investors' money.
2.
What should we do when we go through a new life stage?
Re-evaluate our financial plans. Our financial plans may or may not need to change. But one thing we must do is re-evaluate those plans--otherwise, we won't know whether they need to change at all.
3.
After a major life event, you should _______.
Re-evaluate your investment goals and risk tolerance. Not every life event has to trigger changes for every investor's portfolio. But we should all re-evaluate our financial plans as we pass through a life stage.
4.
To determine how profitable a company is, examine its _______.
Return on assets. Return on assets, or ROA, is a key measure of how well a company uses investors' money.
5.
What kind of organizations would you consult to find out whether a prospective financial advisor has ever been subjected to disciplinary action?
Regulatory organizations. Regulatory organizations--whether professional or governmental--can tell you whether your candidate has ever been disciplined.
