Exam 11: Investment Basics

Latisha invested $1,000 in XYZ stock. Two years later she sold the stock for $1,200. During the time she owned the stock, she received a total of $80 in dividends. What was her total return on this investment?

Investing in bonds tends to be riskier financial strategy than investing in common stocks.

Rank the historical rates of return of the common investments discussed in this chapter from highest to lowest.

When market interest rates go up investors demand ________ returns on other types of investments and when market interest rates go down, the return investors demand on other types of investments ________.

How does the time dimension of investing relate to the concept of liquidity?

Which of the following questions is relevant to setting investment goals?

Examples of political and regulatory risk include

Many people never consider or think of the sources of risk that affect their investments. Which of the following is a risk associated with investing?

Petrina was told by a successful friend to invest in stocks and income-producing real estate. Both of these are examples of ________ investments.

If the nominal rate is 10% and inflation is 3%, the real rate of return is 7%.

Clarify the difference between systematic and unsystematic risk.

You are considering the purchase of a corporation's stock. You have noted that this particular corporation has a high use of debt, which is associated with ________ risk.

What is an advantage to being a "preferred" stock holder?

A catastrophic loss is less critical to an older investor than it is to a younger investor since younger investors typically have less money to lose.

To begin your savings plan it is a good idea to set aside your savings first and only spend what is left over.

Market risk deals with the inability to sell a security quickly at fair market value.

Why should a younger investor, saving for the long term, have most of their money in common stocks?

As a young college graduate, your biggest investment ally is ________.

A typical young investor should have most of their retirement money allocated in common stocks.

The difference between an investment and speculation is that an investment ________ while speculation depends solely on ________ to produce results.