Question 1

A bear market occurs when the market is

Accepted Answer

A)   generally rising.
B)   generally declining.
C)   very volatile.
D)   fairly stagnant.

Question 2

________ is a type of investing strategy in which you purchase a collection of bonds with different maturities spread out over your investment horizon.

Accepted Answer

A)   Laddering
B)   Buy-and-hold
C)   Indexing
D)   DRIP

Question 3

Unlike common stock, preferred stock has

Accepted Answer

A)   priority in dividend payment.
B)   a periodic dividend.
C)   a maturity.
D)   both a periodic dividend and fixed maturity date.

Question 4

In the long run, dollar cost averaging will weight your portfolio with more

Accepted Answer

A)   low-cost shares than high-cost shares.
B)   high-cost shares than low-cost shares.
C)   low-priced stock than high-priced stock.
D)   high-priced shares than low-priced stock.

Question 5

In general, _____ investments provide you with _____ average rates of return over time .

Accepted Answer

A)   riskier; higher
B)   less risky; higher
C)   riskier; lower
D)   less risky; about

Question 6

Financial advisors recommend that you invest no more than ______ percent of your total portfolio in any single investment.

Accepted Answer

A)   5
B)   10
C)   15
D)   20

Question 7

Which of the following is the best strategy for building sufficient wealth for retirement?

Accepted Answer

A)   Starting to save early and taking advantage of compound interest
B)   Investing at the highest rate possible
C)   Taking very high risks
D)   Working with a full-service stockbroker

Question 8

Which of the following is not one of the strategies for successful investing?

Accepted Answer

A)   Understanding and taking advantage of tax rules
B)   Keeping accurate records
C)   Hiring a full-service broker to get access to information
D)   Starting early and be consistent

Question 9

When making investment decisions within a portfolio, which of the following is not a factor to be considered?

Accepted Answer

A)   Obtaining money to invest
B)   Risk tolerance
C)   Time horizon
D)   Tax laws and tax rates

Question 10

Most bonds pay current income in the form of fixed

Accepted Answer

A)   semi-annual periodic payment of interest.
B)   quarterly periodic payment of interest.
C)   quarterly periodic payment of dividends.
D)   semi-annual periodic payment of dividends.

Question 11

In order to assess the performance of a diversified mutual fund invested in stocks, one would use the ________ because it is a broad benchmark.

Accepted Answer

A)   S&P 500 Index
B)   Dow Jones Industrial Average (DJI
A)  
C)   NADAQ Composite Index
D)   Lehman Brothers United States Treasury Index

Question 12

Mutual fund investors are considered

Accepted Answer

A)   lenders to the fund and expect to share in the income of the fund but not the growth.
B)   lenders to the fund and expect to share in the income and growth of the investment pool.
C)   owners of the fund and entitled to share in the growth of the investment pool but not the income.
D)   owners of the fund and entitled to share in the income and growth of the investment pool.

Question 13

Which of the following would be an example of a fixed-income investment?

Accepted Answer

A)   Commodities
B)   Bonds
C)   Stocks
D)   Land B

Question 14

Mindy purchased 100 shares of Fly By Wire Training Academy at $75.50 per share one year ago. She has just received a dividend of $2.50 per share and the share is selling at a price of $89.25. If Mindy sold it at this price, what was her rate of return on Fly By Wire stock over the one-year holding period?

Accepted Answer

A)   21.52%
B)   18.21%
C)   15.41%
D)   3.31%

Question 15

The risk of not being able to convert an asset to cash without losing value is

Accepted Answer

A)   liquidity risk.
B)   reinvestment risk.
C)   default risk.
D)   market risk.

Question 16

Which of the following is the least risky asset class?

Accepted Answer

A)   Money market securities
B)   Derivative securities
C)   Large company stocks
D)   Corporate bonds A

Question 17

If you buy a stock at $50, and, a year later, sell the stock for $60, you have a

Accepted Answer

A)   $10 capital gain.
B)   $60 capital gain.
C)   $10 dividend.
D)   $10 yield. A

Question 18

If a market is truly efficient, security prices reflect

Accepted Answer

A)   no public or private information on the company.
B)   all private information available on the company.
C)   all publicly available information on the company.
D)   all public and private information on the company.

Question 19

Which of the following is a major difference between stock and bond investments?

Accepted Answer

A)   Bonds can be issued by governments but stock cannot.
B)   Stocks have a fixed maturity but bonds do not.
C)   It is possible to earn current income on bonds but not on stock.
D)   All of these choices are correct.

Question 20

Which of the following statements is true regarding speculative investments, such as derivatives?

Accepted Answer

A)   The main return on these investments is typically based on price movement.
B)   These investments typically require a long-term hold.
C)   These investments typically have large tangible asset values.
D)   The size of potential return on these investments is usually limited.

Exam 11: The Fundamentals of Investing

A bear market occurs when the market is

Correct Answer
verified

________ is a type of investing strategy in which you purchase a collection of bonds with different maturities spread out over your investment horizon.

Correct Answer
verified

Unlike common stock, preferred stock has

Correct Answer
verified

In the long run, dollar cost averaging will weight your portfolio with more

Correct Answer
verified

In general, _ investments provide you with _ average rates of return over time .

Correct Answer
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Financial advisors recommend that you invest no more than ______ percent of your total portfolio in any single investment.

Correct Answer
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Which of the following is the best strategy for building sufficient wealth for retirement?

Correct Answer
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Which of the following is not one of the strategies for successful investing?

Correct Answer
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When making investment decisions within a portfolio, which of the following is not a factor to be considered?

Correct Answer
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Most bonds pay current income in the form of fixed

Correct Answer
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In order to assess the performance of a diversified mutual fund invested in stocks, one would use the ________ because it is a broad benchmark.

Correct Answer
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Mutual fund investors are considered

Correct Answer
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Which of the following would be an example of a fixed-income investment?

Correct Answer
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B

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The risk of not being able to convert an asset to cash without losing value is

Correct Answer
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Which of the following is the least risky asset class?

Correct Answer
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A

If you buy a stock at $50, and, a year later, sell the stock for $60, you have a

Correct Answer
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A

If a market is truly efficient, security prices reflect

Correct Answer
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Which of the following is a major difference between stock and bond investments?

Correct Answer
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Which of the following statements is true regarding speculative investments, such as derivatives?

Correct Answer
verified

Exam 11: The Fundamentals of Investing

A bear market occurs when the market is

Correct AnswerverifiedShow Answer

________ is a type of investing strategy in which you purchase a collection of bonds with different maturities spread out over your investment horizon.

Correct AnswerverifiedShow Answer

Unlike common stock, preferred stock has

Correct AnswerverifiedShow Answer

In the long run, dollar cost averaging will weight your portfolio with more

Correct AnswerverifiedShow Answer

In general, _____ investments provide you with _____ average rates of return over time .

Correct AnswerverifiedShow Answer

Financial advisors recommend that you invest no more than ______ percent of your total portfolio in any single investment.

Correct AnswerverifiedShow Answer

Which of the following is the best strategy for building sufficient wealth for retirement?

Correct AnswerverifiedShow Answer

Which of the following is not one of the strategies for successful investing?

Correct AnswerverifiedShow Answer

When making investment decisions within a portfolio, which of the following is not a factor to be considered?

Correct AnswerverifiedShow Answer

Most bonds pay current income in the form of fixed

Correct AnswerverifiedShow Answer

In order to assess the performance of a diversified mutual fund invested in stocks, one would use the ________ because it is a broad benchmark.

Correct AnswerverifiedShow Answer

Mutual fund investors are considered

Correct AnswerverifiedShow Answer

Which of the following would be an example of a fixed-income investment?

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

The risk of not being able to convert an asset to cash without losing value is

Correct AnswerverifiedShow Answer

Which of the following is the least risky asset class?

Correct AnswerverifiedA

If you buy a stock at $50, and, a year later, sell the stock for $60, you have a

Correct AnswerverifiedA

If a market is truly efficient, security prices reflect

Correct AnswerverifiedShow Answer

Which of the following is a major difference between stock and bond investments?

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding speculative investments, such as derivatives?

Correct AnswerverifiedShow Answer

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In general, _ investments provide you with _ average rates of return over time .

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B

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A

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A

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