Exam 11: Investment Planning

Stockbrokers are also known as

Prices are rising in bear markets,indicating economic optimism.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Investments with high current income typically have [high | low] potential capital appreciation.

A prospectus describes the firm and the issue of a new security.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The issuer of the security would get no money from a trade in the [primary | secondary] market.

You have inherited $250,000.You have decided that since you don't need the money currently,you should invest for the long-term.After seeking advice,you decide on an asset allocation plan that puts 10% in short-term securities,75% in equities,and 15% in bond funds.How much money would you put in each category? (Show all work. )

The federal government regulates securities markets through the Securities and Exchange Commission.

The Securities Investor Protection Corporation insurance guarantees the dollar value of your securities will not dip below a certain level.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -[Investing | Speculating] is viewed as a short-term activity that involves the buying and selling of securities in which future value and expected return are highly uncertain.

Assume that the price of ABC common stock fell from in a short period of time from $105 to $84.Which of the following investors probably made the most money,if all of these transactions occurred prior to the drop in price?

An annual stockholder report will contain audited financial statements of the company.

A retired couple can probably bear more risk in their portfolio than a young investor with a secure job.

Two prerequisites to investing are above average risk and clear understanding of market direction.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Fifty shares of stock would constitute [an odd lot | a round lot].

Which of the following terms best describes a day trader

In investment terminology,selling stock that you have borrowed is known as a

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -A corporation that had demonstrated earning power of $2 million [could | could not] be listed on the NYSE.

Instructing your broker to buy or sell a stock at a particular price is a

An essential ingredient of an effective investment strategy is

Preferred stock combines the fixed income features of bonds with the same price appreciation potential as common stocks.