Exam 11: Investment Planning

INSTRUCTIONS: Choose the word or phrase in [ ] that 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 [ broker | dealer ] market is made up of both the National Association of Securities Dealers Automated Quotation System (Nasdaq) market and the over-the-counter (OTC) market.

INSTRUCTIONS: Choose the word or phrase in [ ] that 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 convertible bond would let the investor convert it into a specified number of shares of [ preferred | common ] stock.

The _____ is the amount earned on an investment per dollar invested.

Discount brokers will:

You have just bought 100 shares of ABC Corporation common stock at $70.50 per share. The commission is calculated as 1.5% of the total value of the transaction plus $30. What commission will you be charged, and how much must you pay the broker for the entire transaction? (Show all work.)

The most important reason why people invest is to:

The _____ reflects the total market value of 98 to 99% of all publicly traded stock in the United States.

The most widely followed measure of stock market performance is the New York Stock Exchange (NYSE) index.

Mutual funds provide professional management and diversification that individual investors-especially those with limited resources-can rarely obtain on their own.

The decision on how to divide your portfolio among different types of securities is known as:

Reallocation of the assets in a portfolio is called rebalancing.

INSTRUCTIONS: Choose the word or phrase in [ ] that 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. Ownership in a corporation would be represented by [ stock | bonds ].

A bull market is characterized by:

INSTRUCTIONS: Choose the word or phrase in [ ] that 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. In general, brokerage fees on a round lot of common stock will amount to about [ 1 %| 10% ] of the transaction value.

Subscription advisory services provide information and recommendations on various industries and specific securities.

When you buy 300 shares of a company, you have purchased a(n):

There is generally a trade-off between earning a high current income from an investment and obtaining significant capital appreciation from it.

_____ are senior, unsecured, unsubordinated debt securities issued by an underwriting bank.

_____  have no maturity date.

Common stocks are liabilities.