Exam 10: Personal Investing - Investing Fundamentals

You have invested $16 000.How long it will take to accumulate $100 000 at the fairly conservative rate of 6 percent?

A stock was purchased at $23,sold exactly two years later at $25.50,and paid a $0.70 dividend per year.What was the annual return on investment?

A stock trading at $20 pays a dividend annually of $0.50.The yield is 2.5 percent.

If you wish to have a direct voice in the running of a company,you should purchase

In a conservative portfolio (100 percent invested in bonds),instead,investing 20 percent of the assets to a broad selection of stocks,would increase the expected return on the portfolio,but not the risk.

Buying more of a stock that has just plummeted in value is an example of

Stocks that are undervalued by the market for reasons other than the performance of their business are called

Taking a loan for $5000 to invest in a conservative portfolio is always more risky than saving $5000 to invest in the conservative portfolio.

You are investing to achieve the following goals: A down payment for a cottage in the amount of $8000 in six years,$4000 for a trip to Europe in three years,and $150 000 to supplement retirement income in 24 years.If you can earn 7 percent compounded monthly on your investments,how much should you be saving each month?

If you believe that a firm will grow rapidly in the future,you should buy its

Find an online questionnaire designed to determine your tolerance to investment risk.Explain how the results would suggest you invest funds for the following goals,purchasing a home in seven years and for retiring in 35 years.Indicate the asset allocation you would use for each of these purposes based on your risk tolerance.Explain why the textbook suggests that your asset allocation in your early career should be mostly stocks and in retirement should be mostly bonds and why there could be exceptions to this general rule.

Before you start to invest,you should ensure you have liquidity by owning

Investment risk refers to

When diversifying a portfolio,you should select investments with high positive correlation.

Which one thing do you always have with common stock?

Ellie bought a stock for $18 and sold it for $26.She has a taxable capital gain of $4.

If you predicted that a stock would be worth $40 in five years and that you wanted to get a nine percent average annual return,what price should you be willing to pay for it now? (Assume no fees or taxes. )

Investing prescribed percentages in stocks,bonds,and preferred shares is a type of asset allocation.

Describe how someone's risk tolerance directly impacts their retirement planning.Use an example to illustrate how much difference it would make if someone was a conservative investor who averaged a six percent return over 35 years on their savings versus another more aggressive investor who averaged eight percent over the same period.

In the secondary market,stock prices are