Question 1

The reluctance effect plays on the fear of regret and the seeking of pride,resulting in selling winning stocks too soon and keeping losing stocks too long.

Accepted Answer

A) True 
 B)False

Question 2

A day trader typically sits at a computer and looks for stocks that are moving up or down in value.

Accepted Answer

A) True 
 B)False

Question 3

Much of the day-to-day regulation of the market is left to the securities industry and is performed by the exchanges and the

Accepted Answer

A)  SRC. 
B)  FDIC. 
C)  OTC. 
D)  SIPC. 
E)  FINRA. 
A)  SRC. 
B)  FDIC. 
C)  OTC. 
D)  SIPC. 
E)  FINRA.

Question 4

IBM is considering hiring an investment banker who will purchase and subsequently resell an issue of stock for them.This service is called

Accepted Answer

A)  stock brokerage. 
B)  full-service brokerage. 
C)  underwriting. 
D)  churning. 
E)  none of the above. 
A)  stock brokerage. 
B)  full-service brokerage. 
C)  underwriting. 
D)  churning. 
E)  none of the above.

Question 5

The nominal return on an investment is an illusion.Explain.

Accepted Answer

An illusion is something that is differe

Question 6

You recently purchased a stock for $50.It is now worth $75,and it paid a $15 dividend during the two years you held it.What is your annualized rate of return on this stock?

Accepted Answer

A)  80% 
B)  40% 
C)  27% 
D)  25% 
A)  80% 
B)  40% 
C)  27% 
D)  25%

Question 7

A full service broker will always get you a lower share price on your purchases of stock.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  Over time, common stocks generate the largest average returns. 
B)  Investors with lots of time ahead of them have the opportunity to recover from a serious investment set-back. 
C)  They require the least amount of knowledge, research and expense. 
D)  All of the above are correct. 
E)  Only A and B are correct. 
A)  Over time, common stocks generate the largest average returns. 
B)  Investors with lots of time ahead of them have the opportunity to recover from a serious investment set-back. 
C)  They require the least amount of knowledge, research and expense. 
D)  All of the above are correct. 
E)  Only A and B are correct.

Question 9

One of the most important types of risk associated with real estate is the liquidity risk.

Accepted Answer

A) True 
 B)False

Question 10

The concept of asset allocation has nothing to do with the time dimension of investing.

Accepted Answer

A) True 
 B)False

Question 11

Why is speculating in derivatives,futures contracts and options not appropriate for the typical,long-term investor?

Accepted Answer

These are highly speculative securities

Question 12

An over-the-counter market has a physical location where trading occurs.

Accepted Answer

A) True 
 B)False

Question 13

Herd behavior

Accepted Answer

A)  is a kind of self-fulfilling behavior. 
B)  involves emotions of fearing regret and seeking pride. 
C)  is exemplified when investors take higher risks with profits than they would normally take. 
D)  all of the above. 
A)  is a kind of self-fulfilling behavior. 
B)  involves emotions of fearing regret and seeking pride. 
C)  is exemplified when investors take higher risks with profits than they would normally take. 
D)  all of the above.

Question 14

A good source of investment advice is a neutral party that doesn't charge a fee or earn a commission from you.

Accepted Answer

A) True 
 B)False

Question 15

Diversification lowers risk,but it also lowers the expected return.

Accepted Answer

A) True 
 B)False

Question 16

A limit order specifies a securities trade is to be made only at a certain price or better.

Accepted Answer

A) True 
 B)False

Question 17

Why does it cost so much to trade with a full service broker?

Accepted Answer

A)  Full service brokers offer stock research and investment advice. 
B)  Full service brokers offer many different customer services. 
C)  Full service brokers provide a one-on-one personal relationship with the customer. 
D)  All of the above are correct. 
A)  Full service brokers offer stock research and investment advice. 
B)  Full service brokers offer many different customer services. 
C)  Full service brokers provide a one-on-one personal relationship with the customer. 
D)  All of the above are correct.

Question 18

As a young college graduate,your biggest investment ally is

Accepted Answer

A)  leverage. 
B)  the amount of investment. 
C)  tax-free investments. 
D)  time. 
E)  the class of investments. 
A)  leverage. 
B)  the amount of investment. 
C)  tax-free investments. 
D)  time. 
E)  the class of investments.

Question 19

Hostess and Kodak recently filed for bankruptcy protection in an attempt to restructure their debts.One could assume that both of these companies experienced too much ________ risk.

Accepted Answer

A)  business 
B)  interest rate 
C)  financial 
D)  liquidity 
A)  business 
B)  interest rate 
C)  financial 
D)  liquidity

Question 20

A(n)________ account represents the money over which you give a broker power to trade for you.

Accepted Answer

A)  discretionary 
B)  discount 
C)  stock purchasing 
D)  securities 
E)  indemnity 
A)  discretionary 
B)  discount 
C)  stock purchasing 
D)  securities 
E)  indemnity

The reluctance effect plays on the fear of regret and the seeking of pride,resulting in selling winning stocks too soon and keeping losing stocks too long.

A day trader typically sits at a computer and looks for stocks that are moving up or down in value.

Much of the day-to-day regulation of the market is left to the securities industry and is performed by the exchanges and the

IBM is considering hiring an investment banker who will purchase and subsequently resell an issue of stock for them.This service is called

The nominal return on an investment is an illusion.Explain.

You recently purchased a stock for $50.It is now worth $75,and it paid a $15 dividend during the two years you held it.What is your annualized rate of return on this stock?

A full service broker will always get you a lower share price on your purchases of stock.

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

One of the most important types of risk associated with real estate is the liquidity risk.

The concept of asset allocation has nothing to do with the time dimension of investing.

Why is speculating in derivatives,futures contracts and options not appropriate for the typical,long-term investor?

An over-the-counter market has a physical location where trading occurs.

Herd behavior

A good source of investment advice is a neutral party that doesn't charge a fee or earn a commission from you.

Diversification lowers risk,but it also lowers the expected return.

A limit order specifies a securities trade is to be made only at a certain price or better.

Why does it cost so much to trade with a full service broker?

As a young college graduate,your biggest investment ally is

Hostess and Kodak recently filed for bankruptcy protection in an attempt to restructure their debts.One could assume that both of these companies experienced too much ________ risk.

A(n)________ account represents the money over which you give a broker power to trade for you.

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

The reluctance effect plays on the fear of regret and the seeking of pride,resulting in selling winning stocks too soon and keeping losing stocks too long.

A day trader typically sits at a computer and looks for stocks that are moving up or down in value.

Much of the day-to-day regulation of the market is left to the securities industry and is performed by the exchanges and the

IBM is considering hiring an investment banker who will purchase and subsequently resell an issue of stock for them.This service is called

The nominal return on an investment is an illusion.Explain.

You recently purchased a stock for $50.It is now worth $75,and it paid a $15 dividend during the two years you held it.What is your annualized rate of return on this stock?

A full service broker will always get you a lower share price on your purchases of stock.

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

One of the most important types of risk associated with real estate is the liquidity risk.

The concept of asset allocation has nothing to do with the time dimension of investing.

Why is speculating in derivatives,futures contracts and options not appropriate for the typical,long-term investor?

An over-the-counter market has a physical location where trading occurs.

Herd behavior

A good source of investment advice is a neutral party that doesn't charge a fee or earn a commission from you.

Diversification lowers risk,but it also lowers the expected return.

A limit order specifies a securities trade is to be made only at a certain price or better.

Why does it cost so much to trade with a full service broker?

As a young college graduate,your biggest investment ally is

Hostess and Kodak recently filed for bankruptcy protection in an attempt to restructure their debts.One could assume that both of these companies experienced too much ________ risk.

A(n)________ account represents the money over which you give a broker power to trade for you.

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