Question 1

A(n) ____ is a systematic program where an investor agrees to invest a specific dollar amount periodically over a long time.

Accepted Answer

A) asset allocation 
B) dollar-cost averaging plan 
C) accumulation plan 
D) active investment plan 
A) asset allocation 
B) dollar-cost averaging plan 
C) accumulation plan 
D) active investment plan

Question 2

An investor who reduces random risk by investing in a variety of types of investments is using

Accepted Answer

A) the buy-and-hold approach. 
B) dollar-cost averaging. 
C) rules and charts. 
D) portfolio diversification. 
A) the buy-and-hold approach. 
B) dollar-cost averaging. 
C) rules and charts. 
D) portfolio diversification.

Question 3

Which of the following arises when investors decide to copy the observed decisions of other investors or movements in the markets rather than follow their own beliefs and information.

Accepted Answer

A) herd-behavior. 
B) market timing. 
C) market seeking. 
D) passive investing. 
A) herd-behavior. 
B) market timing. 
C) market seeking. 
D) passive investing.

Question 4

____ is an example of an ownership investment.

Accepted Answer

A) Treasury Bills 
B) Mortgage-backed bonds 
C) Common corporate stock 
D) Corporate bonds 
A) Treasury Bills 
B) Mortgage-backed bonds 
C) Common corporate stock 
D) Corporate bonds

Question 5

You put your money into a 0.05 percent savings account.After two years you take your money out of the account,only to find that your purchasing power has decreased.This is an example of ____ risk.

Accepted Answer

A) inflation 
B) deflation 
C) interest rate 
D) marketability 
A) inflation 
B) deflation 
C) interest rate 
D) marketability

Question 6

The income received in return for someone's use of your property is called

Accepted Answer

A) interest. 
B) capital gains. 
C) dividends. 
D) rent. 
A) interest. 
B) capital gains. 
C) dividends. 
D) rent.

Question 7

By investing in alternatives that are higher on the investment pyramid,one is exposed to ____ risk to his or her capital and ____ risk of loss.

Accepted Answer

A) increasing; increasing 
B) increasing; decreasing 
C) decreasing; decreasing 
D) decreasing; increasing 
A) increasing; increasing 
B) increasing; decreasing 
C) decreasing; decreasing 
D) decreasing; increasing

Question 8

Investment risk represents the uncertainty that the yield on an investment will deviate from what is expected.

Accepted Answer

A) True 
 B)False

Question 9

____ risk exists when there is no potential for gain,only the possibility of loss.

Accepted Answer

A) Pure 
B) Investment 
C) Speculative 
D) Unsystematic 
A) Pure 
B) Investment 
C) Speculative 
D) Unsystematic

Question 10

A long-term investor generally has a high-risk investment philosophy.

Accepted Answer

A) True 
 B)False

Question 11

The likelihood that an investment market will fluctuate up and down is its market

Accepted Answer

A) vulnerability. 
B) diversity. 
C) volatility. 
D) leverage. 
A) vulnerability. 
B) diversity. 
C) volatility. 
D) leverage.

Question 12

A passive investor carefully studies investment alternatives,regularly monitors them,and makes decisions to buy and sell with or without the advice of a professional.

Accepted Answer

A) True 
 B)False

Question 13

Portfolio diversification ____ volatility while ____ return.

Accepted Answer

A) reduces; averaging out 
B) increases; averaging out 
C) reduces; increases 
D) increases; reduces 
A) reduces; averaging out 
B) increases; averaging out 
C) reduces; increases 
D) increases; reduces

Question 14

A suitability standard requires brokers to act in the best interest of their employer rather than the best interest of their clients.

Accepted Answer

A) True 
 B)False

Question 15

In the leveraging process,your own money is used to make an investment with the goal of earning a rate of return in excess of the final selling price.

Accepted Answer

A) True 
 B)False

Question 16

You can accept ____ risk when investing for long-term goals.

Accepted Answer

A) unlimited 
B) more 
C) less 
D) no 
A) unlimited 
B) more 
C) less 
D) no

Question 17

A ____ in the market is a person who expects securities prices to go up; a ____ expects the general market to decline.

Accepted Answer

A) bear; bear 
B) bull; bull 
C) bull; bear 
D) bear; bull 
A) bear; bear 
B) bull; bull 
C) bull; bear 
D) bear; bull

Question 18

Capital gains (losses) are not realized until one actually sells the investment.

Accepted Answer

A) True 
 B)False

Question 19

People seeking aggressive returns should consider investing in

Accepted Answer

A) fast-growing companies. 
B) high-yielding junk bonds. 
C) stock-index and commodity futures. 
D) (Any of these) 
A) fast-growing companies. 
B) high-yielding junk bonds. 
C) stock-index and commodity futures. 
D) (Any of these)

Question 20

Investors want to earn a ____ for their willingness to make investments for which there is no absolute guarantee of future success.

Accepted Answer

A) capital gain 
B) risk premium 
C) current income 
D) risk profit 
A) capital gain 
B) risk premium 
C) current income 
D) risk profit

A(n) ____ is a systematic program where an investor agrees to invest a specific dollar amount periodically over a long time.

An investor who reduces random risk by investing in a variety of types of investments is using

Which of the following arises when investors decide to copy the observed decisions of other investors or movements in the markets rather than follow their own beliefs and information.

____ is an example of an ownership investment.

You put your money into a 0.05 percent savings account.After two years you take your money out of the account,only to find that your purchasing power has decreased.This is an example of ____ risk.

The income received in return for someone's use of your property is called

By investing in alternatives that are higher on the investment pyramid,one is exposed to risk to his or her capital and risk of loss.

Investment risk represents the uncertainty that the yield on an investment will deviate from what is expected.

____ risk exists when there is no potential for gain,only the possibility of loss.

A long-term investor generally has a high-risk investment philosophy.

The likelihood that an investment market will fluctuate up and down is its market

A passive investor carefully studies investment alternatives,regularly monitors them,and makes decisions to buy and sell with or without the advice of a professional.

Portfolio diversification volatility while return.

A suitability standard requires brokers to act in the best interest of their employer rather than the best interest of their clients.

In the leveraging process,your own money is used to make an investment with the goal of earning a rate of return in excess of the final selling price.

You can accept ____ risk when investing for long-term goals.

A in the market is a person who expects securities prices to go up; a expects the general market to decline.

Capital gains (losses) are not realized until one actually sells the investment.

People seeking aggressive returns should consider investing in

Investors want to earn a ____ for their willingness to make investments for which there is no absolute guarantee of future success.

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters

Exam 13: Investment Fundamentals

A(n) ____ is a systematic program where an investor agrees to invest a specific dollar amount periodically over a long time.

An investor who reduces random risk by investing in a variety of types of investments is using

Which of the following arises when investors decide to copy the observed decisions of other investors or movements in the markets rather than follow their own beliefs and information.

____ is an example of an ownership investment.

You put your money into a 0.05 percent savings account.After two years you take your money out of the account,only to find that your purchasing power has decreased.This is an example of ____ risk.

The income received in return for someone's use of your property is called

By investing in alternatives that are higher on the investment pyramid,one is exposed to ____ risk to his or her capital and ____ risk of loss.

Investment risk represents the uncertainty that the yield on an investment will deviate from what is expected.

____ risk exists when there is no potential for gain,only the possibility of loss.

A long-term investor generally has a high-risk investment philosophy.

The likelihood that an investment market will fluctuate up and down is its market

A passive investor carefully studies investment alternatives,regularly monitors them,and makes decisions to buy and sell with or without the advice of a professional.

Portfolio diversification ____ volatility while ____ return.

A suitability standard requires brokers to act in the best interest of their employer rather than the best interest of their clients.

In the leveraging process,your own money is used to make an investment with the goal of earning a rate of return in excess of the final selling price.

You can accept ____ risk when investing for long-term goals.

A ____ in the market is a person who expects securities prices to go up; a ____ expects the general market to decline.

Capital gains (losses) are not realized until one actually sells the investment.

People seeking aggressive returns should consider investing in

Investors want to earn a ____ for their willingness to make investments for which there is no absolute guarantee of future success.

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters

By investing in alternatives that are higher on the investment pyramid,one is exposed to risk to his or her capital and risk of loss.

Portfolio diversification volatility while return.

A in the market is a person who expects securities prices to go up; a expects the general market to decline.