Exam 13: Investment Fundamentals

The asset allocation strategy is a form of diversification.

____ investors primarily seek capital gains.

Research suggests that you can eliminate random risk by holding ____ or more stocks and bonds.

One should invest in a tax-free investment rather than a taxable investment whenever a tax-free investment opportunity is available.

Total risk comprises random risk and market risk.

Lending investments are also called equities.

To employ leverage,you should borrow funds to make an investment with the goal of earning a rate of return in excess of the after-tax costs of borrowing.

Short-term investors are usually more interested in current income than capital gains.

Investors with a(n) ____ investment philosophy seek capital gains through slow and steady growth in the value of their investments along with some current income.

To earn the best returns,you should be invested in the market for only a handful of days each year.

A portfolio is a collection of investments assembled to meet your investment goals.

Paid services that automatically rebalance employees' retirement assets are called a/an

Tyler is going to invest $2,000 in a money market mutual fund.He has narrowed his choices to a tax-free fund currently earning 2.8 percent and a taxable fund earning 4.1 percent.If Tyler is in the 28 percent marginal tax bracket,which of these funds would give him the highest after-tax yield?

Maria purchased 100 shares of JAX stock for $30 per share and sold this same stock one year later for $29 per share.She paid commissions of $50 when she purchased the stock and $45 when she sold the stock.Dividends of $2 per share were paid during the year.The capital loss on this stock transaction was

Market timing entails shifting your money into cash or bonds when you think stocks and stock mutual funds are overpriced and then later reinvesting your money in stocks and stock mutual funds.

____ is not part of the steps in the investment planning process.

The amount of risk premium desired by most investors is in the range of _____ percent.

Investors that follow a(n) ____ strategy buy a widely diversified mix of stocks and/or mutual funds,reinvest the dividends,and hold on to those investments almost indefinitely.

If your time horizon is zero to five years and your portfolio consists of 35 percent cash,40 percent bonds,and 25 percent stocks,you would be considered to have a(n) ____ investment philosophy.

Bear markets on average last about