Question 1

What is the purpose of a margin account and using margin to purchase stocks?

Accepted Answer

A)  A margin account allows you to purchase stocks without using any of your own money. 
B)  A margin account allows you to purchase more shares than you could afford to purchase using only your own money. 
C)  Using margin to purchase more shares gives you the potential to earn a higher return on your investment. 
D)  All of the above are correct. 
E)  Only B and C are correct. 
A)  A margin account allows you to purchase stocks without using any of your own money. 
B)  A margin account allows you to purchase more shares than you could afford to purchase using only your own money. 
C)  Using margin to purchase more shares gives you the potential to earn a higher return on your investment. 
D)  All of the above are correct. 
E)  Only B and C are correct.

Question 2

A prerequisite to investing is to perform a financial reality check.Explain its 3 parts.

Accepted Answer

Balance your budget.If you do not live w

Question 3

Investing in bonds is generally less risky than investing in stocks.

Accepted Answer

A) True 
 B)False

Question 4

Seasoned new issues are stock offerings by companies that already have common stock traded in the marketplace.

Accepted Answer

A) True 
 B)False

Question 5

Clarify the difference between systematic and unsystematic risk.

Accepted Answer

Systematic risk is that portion of a sec

Question 6

When you purchase an asset that generates a return,it is generally considered to be

Accepted Answer

A)  an investment. 
B)  speculation. 
C)  a windfall. 
D)  an expected returner. 
E)  none of the above. 
A)  an investment. 
B)  speculation. 
C)  a windfall. 
D)  an expected returner. 
E)  none of the above.

Question 7

A(n)________ order is an order to sell if the price drops below a specified level or buy if the price climbs above a specified level.

Accepted Answer

A)  good-till-cancelled 
B)  stop 
C)  limit 
D)  market 
E)  open 
A)  good-till-cancelled 
B)  stop 
C)  limit 
D)  market 
E)  open

Question 8

In the over-the-counter market,the individual investor must be physically present to purchase the security over-the-counter.

Accepted Answer

A) True 
 B)False

Question 9

You recently purchased a stock for $25.It is now worth $35,and it paid a $5 dividend during the time you held it.Your rate of return on this stock is closest to which of the following?

Accepted Answer

A)  60% 
B)  -20% 
C)  43% 
D)  40% 
A)  60% 
B)  -20% 
C)  43% 
D)  40%

Question 10

Barney Q.Hopkins borrows stock from his broker (short selling)with the goal of ________ and ________.

Accepted Answer

A)  buying low; selling later 
B)  buying low; selling low 
C)  buying high; selling low 
D)  selling high; later buying low 
E)  borrowing money; buying low 
A)  buying low; selling later 
B)  buying low; selling low 
C)  buying high; selling low 
D)  selling high; later buying low 
E)  borrowing money; buying low

Question 11

You have decided to give your stockbroker the power to make trades in the market on your behalf,without notifying you of the trades prior to execution.This is an example of

Accepted Answer

A)  a power agreement. 
B)  a discretionary account. 
C)  an independent account. 
D)  none of the above. 
A)  a power agreement. 
B)  a discretionary account. 
C)  an independent account. 
D)  none of the above.

Question 12

Principle #2: the time value of money tells us that time is our greatest ally.This being so,the most important and most difficult step is making the commitment to get started.Tell how to find the money and get started with Principle #15: just do it.

Accepted Answer

Pay yourself first instead of last;that

Question 13

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

Accepted Answer

1. Common stocks
2.

Question 14

Which of the following statements is not true of asset allocation?

Accepted Answer

A)  Investments are spread across several different investment classes. 
B)  Investments reflect the investor's specific time horizon. 
C)  Allocation may be made in domestic stocks and bonds. 
D)  Allocation may be made in international stocks and bonds. 
E)  All of the above statements are true. 
A)  Investments are spread across several different investment classes. 
B)  Investments reflect the investor's specific time horizon. 
C)  Allocation may be made in domestic stocks and bonds. 
D)  Allocation may be made in international stocks and bonds. 
E)  All of the above statements are true.

Question 15

You want to buy stock in a dynamic electronics firm.You place an order that cannot be completely filled the first day,so you ask for a(n)

Accepted Answer

A)  second chance. 
B)  market order. 
C)  open order. 
D)  day order. 
E)  extended order. 
A)  second chance. 
B)  market order. 
C)  open order. 
D)  day order. 
E)  extended order.

Question 16

Investment advice is very difficult to find and expensive to purchase.

Accepted Answer

A) True 
 B)False

Question 17

Sally is attempting to purchase 88 shares of Google's stock.Sally is purchasing a(n)________ lot of stocks.

Accepted Answer

A)  square 
B)  round 
C)  odd 
D)  margin 
E)  cannot determine from the information provided 
A)  square 
B)  round 
C)  odd 
D)  margin 
E)  cannot determine from the information provided

Question 18

An efficient market is one in which all relevant information about the stock is reflected in the stock price.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  An apartment complex 
B)  A shopping mall 
C)  Your personal home 
D)  All of the above 
E)  Only A and B above 
A)  An apartment complex 
B)  A shopping mall 
C)  Your personal home 
D)  All of the above 
E)  Only A and B above

Question 20

Which of the following purchase orders indicates that you want to buy or sell immediately?

Accepted Answer

A)  Limit order 
B)  Market order 
C)  Day order 
D)  Open order 
A)  Limit order 
B)  Market order 
C)  Day order 
D)  Open order

What is the purpose of a margin account and using margin to purchase stocks?

A prerequisite to investing is to perform a financial reality check.Explain its 3 parts.

Investing in bonds is generally less risky than investing in stocks.

Seasoned new issues are stock offerings by companies that already have common stock traded in the marketplace.

Clarify the difference between systematic and unsystematic risk.

When you purchase an asset that generates a return,it is generally considered to be

A(n)________ order is an order to sell if the price drops below a specified level or buy if the price climbs above a specified level.

In the over-the-counter market,the individual investor must be physically present to purchase the security over-the-counter.

You recently purchased a stock for $25.It is now worth $35,and it paid a $5 dividend during the time you held it.Your rate of return on this stock is closest to which of the following?

Barney Q.Hopkins borrows stock from his broker (short selling)with the goal of and .

You have decided to give your stockbroker the power to make trades in the market on your behalf,without notifying you of the trades prior to execution.This is an example of

Principle #2: the time value of money tells us that time is our greatest ally.This being so,the most important and most difficult step is making the commitment to get started.Tell how to find the money and get started with Principle #15: just do it.

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

Which of the following statements is not true of asset allocation?

You want to buy stock in a dynamic electronics firm.You place an order that cannot be completely filled the first day,so you ask for a(n)

Investment advice is very difficult to find and expensive to purchase.

Sally is attempting to purchase 88 shares of Google's stock.Sally is purchasing a(n)________ lot of stocks.

An efficient market is one in which all relevant information about the stock is reflected in the stock price.

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

Which of the following purchase orders indicates that you want to buy or sell immediately?

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

What is the purpose of a margin account and using margin to purchase stocks?

A prerequisite to investing is to perform a financial reality check.Explain its 3 parts.

Investing in bonds is generally less risky than investing in stocks.

Seasoned new issues are stock offerings by companies that already have common stock traded in the marketplace.

Clarify the difference between systematic and unsystematic risk.

When you purchase an asset that generates a return,it is generally considered to be

A(n)________ order is an order to sell if the price drops below a specified level or buy if the price climbs above a specified level.

In the over-the-counter market,the individual investor must be physically present to purchase the security over-the-counter.

You recently purchased a stock for $25.It is now worth $35,and it paid a $5 dividend during the time you held it.Your rate of return on this stock is closest to which of the following?

Barney Q.Hopkins borrows stock from his broker (short selling)with the goal of ________ and ________.

You have decided to give your stockbroker the power to make trades in the market on your behalf,without notifying you of the trades prior to execution.This is an example of

Principle #2: the time value of money tells us that time is our greatest ally.This being so,the most important and most difficult step is making the commitment to get started.Tell how to find the money and get started with Principle #15: just do it.

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

Which of the following statements is not true of asset allocation?

You want to buy stock in a dynamic electronics firm.You place an order that cannot be completely filled the first day,so you ask for a(n)

Investment advice is very difficult to find and expensive to purchase.

Sally is attempting to purchase 88 shares of Google's stock.Sally is purchasing a(n)________ lot of stocks.

An efficient market is one in which all relevant information about the stock is reflected in the stock price.

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

Which of the following purchase orders indicates that you want to buy or sell immediately?

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

Barney Q.Hopkins borrows stock from his broker (short selling)with the goal of and .