Exam 11: Investment Basics

ABC Corporation is selling additional shares of common stock.Although ABC Corporation has already sold shares of stock in the public equity markets,these are new shares of stock,and have never been sold or traded previously.This is called a(n)

It is a good idea for every investor to read the Wall Street Journal.

Stocks of most larger companies trade on the American Stock Exchange,while the stocks of most smaller companies trade on the New York Stock Exchange.

You are considering the purchase of a corporation's stock.You have noted that this particular corporation has a high use of debt,which is associated with ________ risk.

When an individual investor sells their shares on the OTC,the price at which they are willing to sell is called the bid price.

How does the principle of diversification work?

When a stock price reflects all relevant information about the stock,the market is said to be

Systematic risk can be effectively managed through diversification.

The more efficient the market,the faster prices react to new information.

When purchasing stock short,you must put up some collateral.

Jeffery is an underwriter and sells shares on the ________ market for his job.However,in his personal investment life,he will purchase his stocks through the ________ market.

A discount broker executes trades but does not provide much advice.

What is an efficient market and can you beat the market?

Albert just purchased a $1,000,5.4%,10-year bond when he heard about his friend Charlie who just bought a similar bond at $1,000;9.5%,10-year bond.What kind of risk did Albert just experience?

What is the purpose of return on investment?

Which of the following statements regarding risk in investing is most correct?

Interest rates are closely tied to the rate of inflation.

During times of rising inflation,investments with fixed returns like a bond or bank CD are attractive investments to own.

Securities that are less frequently traded,along with many new and high-tech stocks,are relegated to the

An individual investor should look for a stock broker who will churn their accounts for them.