Exam 11: Investment Basics

On average, just by chance, half of the stockmarket's investors will outperform the market and half will underperform the market.

The real rate of return is the nominal rate of return adjusted for inflation.

Why should investors with a short investment horizon invest less money in common stocks?

What type of investment would have a high risk premium associated with political and regulatory risk?

In trying to "time the market" investors are just as likely to miss out on upswings in the market as well as avoid down turns.

For the international investor, exchange rate risk is simply another layer of risk.

Under the risk aversion effect, investors who lose money are more reluctant to take risks.

Typically, the closer you get to retirement, the smaller the proportion of your retirement funds that should be invested in common stocks.

Herd behavior

When a stock price reflects all relevant information about the stock, the market is said to be ________.

Real estate investments can be income-producing investments. Which of these would be included as an income-producing real estate investment?

That portion of a stock's risk or variability that cannot be eliminated through investor diversification is called ________ risk.

As the length of your investment horizon increases, you can assume greater risks with your investing.

Purchasing derivatives is a form of speculating.

Systematic risk can be effectively managed through diversification.

Long-term capital gains have favorable tax treatment over earned income.

That portion of a stock's risk or variability that can be eliminated through investor diversification is called ________ risk.

The ________ date is the date at which the bond issuer must repay the loan or borrowed funds.

Bruce Lee owns stocks, bonds, real estate, gold coins, T-Bills, and gemstones. He has a(n) ________.

Asset allocation has to do with how your money should be divided among which of the following?