Question 1

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

Accepted Answer

A)  unsystematic 
B)  systematic 
C)  unrealistic 
D)  inflation 
E)  volatility 
A)  unsystematic 
B)  systematic 
C)  unrealistic 
D)  inflation 
E)  volatility

Question 2

Generally,day trading should be avoided.If you decide to participate in day trading,what should you keep in mind?

Accepted Answer

Be prepared to suffer severe financial l

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  premium 
B)  ending 
C)  completion 
D)  maturity 
E)  none of the above 
A)  premium 
B)  ending 
C)  completion 
D)  maturity 
E)  none of the above

Question 5

The rate of return on an investment is calculated by dividing the capital gain or loss plus the cash flows by the initial investment amount.

Accepted Answer

A) True 
 B)False

Question 6

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of Microsoft at $150 per share.The price increases to $175 per share.What is the net value of your investment (margin)now?

Accepted Answer

A)  $17,500 
B)  $15,000 
C)  $ 7,500 
D)  $ 3,750 
E)  None of the above 
A)  $17,500 
B)  $15,000 
C)  $ 7,500 
D)  $ 3,750 
E)  None of the above

Question 7

You purchased an investment for $1,000 on which you earned $120 investment last year.The inflation rate during that time was 3%.What was your real rate of return?

Accepted Answer

A)  3% 
B)  9% 
C)  12% 
D)  15% 
E)  None of the above 
A)  3% 
B)  9% 
C)  12% 
D)  15% 
E)  None of the above

Question 8

Recently an oil rig in the Gulf of Texas blew up causing the value of your stock in the company who owns the oil rig to fall.What type of risk does this represent?

Accepted Answer

A)  Diversifiable risk 
B)  Systematic risk 
C)  Political and regulatory risk 
D)  Both B and C 
A)  Diversifiable risk 
B)  Systematic risk 
C)  Political and regulatory risk 
D)  Both B and C

Question 9

The price at which an individual is willing to sell a security is called the

Accepted Answer

A)  set price. 
B)  bid price. 
C)  ask on offer price. 
D)  take price. 
E)  none of the above. 
A)  set price. 
B)  bid price. 
C)  ask on offer price. 
D)  take price. 
E)  none of the above.

Question 10

If the corporation that issued a bond goes bankrupt,the bondholders are paid before stock holders are paid from any remaining assets of the corporation.

Accepted Answer

A) True 
 B)False

Question 11

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of stock at $80 per share.The price increases to $100 per share.What is the net value of your investment (margin)now?

Accepted Answer

A)  $10,000 
B)  $8,000 
C)  $6,000 
D)  $5,000 
E)  $2,000 
A)  $10,000 
B)  $8,000 
C)  $6,000 
D)  $5,000 
E)  $2,000

Question 12

The real rate of return can never be a negative number.

Accepted Answer

A) True 
 B)False

Question 13

Particularly,during election years,investors should make themselves aware of the risk resulting from unanticipated changes in the tax or legal environment.This is classified as political and regulatory risk.

Accepted Answer

A) True 
 B)False

Question 14

Investors with ________ accounts pay in full for their security purchases.

Accepted Answer

A)  margin 
B)  cash 
C)  initial margin 
D)  maintenance margin 
A)  margin 
B)  cash 
C)  initial margin 
D)  maintenance margin

Question 15

A security whose value is based solely on the value of other assets is called a ________ security.

Accepted Answer

A)  capital option 
B)  hedging 
C)  derivative 
D)  alternative asset 
E)  none of the above 
A)  capital option 
B)  hedging 
C)  derivative 
D)  alternative asset 
E)  none of the above

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

ABC Corporation is selling additional shares of common stock.These are new shares of stock,and have never been sold or traded previously.The selling of these shares would take place in the ________ market.

Accepted Answer

A)  primary 
B)  secondary 
C)  tertiary 
D)  quaternary 
E)  none of the above 
A)  primary 
B)  secondary 
C)  tertiary 
D)  quaternary 
E)  none of the above

Question 18

Provide an explanation for the concept of asset allocation in investing and differentiate between the 3 stages.

Accepted Answer

Asset allocation attempts to ensure that

Question 19

A prospectus is an advertisement placed in a newspaper or magazine that provides a listing of the underwriting syndicate involved in the new offering,in addition to basic information on the offering.

Accepted Answer

A) True 
 B)False

Question 20

Which organization would handle frequently traded OTC stock,bonds,and foreign stock?

Accepted Answer

The over the counter market handles freq

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

Generally,day trading should be avoided.If you decide to participate in day trading,what should you keep in mind?

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

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

The rate of return on an investment is calculated by dividing the capital gain or loss plus the cash flows by the initial investment amount.

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of Microsoft at $150 per share.The price increases to $175 per share.What is the net value of your investment (margin)now?

You purchased an investment for $1,000 on which you earned $120 investment last year.The inflation rate during that time was 3%.What was your real rate of return?

Recently an oil rig in the Gulf of Texas blew up causing the value of your stock in the company who owns the oil rig to fall.What type of risk does this represent?

The price at which an individual is willing to sell a security is called the

If the corporation that issued a bond goes bankrupt,the bondholders are paid before stock holders are paid from any remaining assets of the corporation.

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of stock at $80 per share.The price increases to $100 per share.What is the net value of your investment (margin)now?

The real rate of return can never be a negative number.

Particularly,during election years,investors should make themselves aware of the risk resulting from unanticipated changes in the tax or legal environment.This is classified as political and regulatory risk.

Investors with ________ accounts pay in full for their security purchases.

A security whose value is based solely on the value of other assets is called a ________ security.

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

ABC Corporation is selling additional shares of common stock.These are new shares of stock,and have never been sold or traded previously.The selling of these shares would take place in the ________ market.

Provide an explanation for the concept of asset allocation in investing and differentiate between the 3 stages.

A prospectus is an advertisement placed in a newspaper or magazine that provides a listing of the underwriting syndicate involved in the new offering,in addition to basic information on the offering.

Which organization would handle frequently traded OTC stock,bonds,and foreign stock?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 11: Investment Basics

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

Generally,day trading should be avoided.If you decide to participate in day trading,what should you keep in mind?

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

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

The rate of return on an investment is calculated by dividing the capital gain or loss plus the cash flows by the initial investment amount.

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of Microsoft at $150 per share.The price increases to $175 per share.What is the net value of your investment (margin)now?

You purchased an investment for $1,000 on which you earned $120 investment last year.The inflation rate during that time was 3%.What was your real rate of return?

Recently an oil rig in the Gulf of Texas blew up causing the value of your stock in the company who owns the oil rig to fall.What type of risk does this represent?

The price at which an individual is willing to sell a security is called the

If the corporation that issued a bond goes bankrupt,the bondholders are paid before stock holders are paid from any remaining assets of the corporation.

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of stock at $80 per share.The price increases to $100 per share.What is the net value of your investment (margin)now?

The real rate of return can never be a negative number.

Particularly,during election years,investors should make themselves aware of the risk resulting from unanticipated changes in the tax or legal environment.This is classified as political and regulatory risk.

Investors with ________ accounts pay in full for their security purchases.

A security whose value is based solely on the value of other assets is called a ________ security.

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

ABC Corporation is selling additional shares of common stock.These are new shares of stock,and have never been sold or traded previously.The selling of these shares would take place in the ________ market.

Provide an explanation for the concept of asset allocation in investing and differentiate between the 3 stages.

A prospectus is an advertisement placed in a newspaper or magazine that provides a listing of the underwriting syndicate involved in the new offering,in addition to basic information on the offering.

Which organization would handle frequently traded OTC stock,bonds,and foreign stock?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters