Exam 11: Investment Basics

Jordan has a few thousand dollars to invest.He wants to find newly issued stock of a fast- growing new company.He will contact an underwriter and attempt to purchase the shares in the ________ market.

Although some bonds are traded on the NYSE,most of the buying and selling of bonds doesn't occur on organized exchanges.

One should keep in mind that when it comes to tax advantages,________ is/are better than ________.

An option gives its owner the right to buy or sell an asset.This asset is generally

A margin call requires you to replenish the margin account by adding additional cash or securities to bring the account back up to the minimum.

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.

Your next-door neighbor,a kind,elderly lady,just discovered that her stock account had been excessively traded in an inappropriate manner,mainly to generate excess commissions.This is an example of

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?

On the TV show "The Big Bang Theory" the main characters are frequently seen purchasing comic books.Purchasing rare comic books is an example of investing.

Alice learned that the difference between the real rate of return and the nominal or quoted rate of return is that

A sale of a security in the primary markets is the only time the issuing company receives the proceeds from the sale.

A market order is an order to buy or sell a set number of securities immediately at the best price available.

According to the Keown book,which of the following is not a primary source of information about the stock market and individual stocks?

Stocks are initially sold in the primary markets with the help of an investment banker serving as the underwriter.

A young investor who is averse to risk should invest their money in government bonds.

Because it's difficult to beat the market,make sure you don't give away too much of your return in the way of commissions.

Explain the bid and ask price system when trading in stocks.

Why do investors sometimes demand risk premiums when investing?

Acting upon assumed good advice,your brother buys stock in I-Link,an upcoming communications firm.Since this is the first time I-Link is trading its stock,your brother will be involved in a(n)

The price at which an individual investor is willing to buy a security is the bid price.