Question 1

What is the term for buying several different kinds of investments rather than just one?

Accepted Answer

A)  spreading 
B)  shorting 
C)  margin buying 
D)  diversification 
E)  management 
A)  spreading 
B)  shorting 
C)  margin buying 
D)  diversification 
E)  management

Question 2

Which of the following, if True, would undermine Ryerson's argument?

Accepted Answer

A)  Some companies have stock that grows in value. 
B)  The stock market sometimes falls in overall value. 
C)  Savings interest rates are not as high as those of some stocks. 
D)  Savings interest rates can be lower than the rate of inflation. 
E)  Savings accounts can be opened only with a minimum balance. 
A)  Some companies have stock that grows in value. 
B)  The stock market sometimes falls in overall value. 
C)  Savings interest rates are not as high as those of some stocks. 
D)  Savings interest rates can be lower than the rate of inflation. 
E)  Savings accounts can be opened only with a minimum balance.

Question 3

Twenty-six-year-old Lisa Lamont became an investor one day after a friend explained that there was a much better way to make her money work for her than by letting it sit in a savings account earning a very low rate of interest. Lisa decided to withdraw $10,000 from her savings account and invest it in stocks. She wanted to invest it in such a way as to minimize her risk. Which one of the following strategies makes the most sense for a new investor like Lisa?

Accepted Answer

A)  Invest all $10,000 in a small fast-growing computer company. 
B)  Invest $5,000 in a gold mining company and $5,000 in a silver mine. 
C)  Invest the $10,000 in four different home builders. 
D)  Invest $10,000 in ten different oil companies. 
E)  Invest $10,000 in a large-cap mutual fund. 
A)  Invest all $10,000 in a small fast-growing computer company. 
B)  Invest $5,000 in a gold mining company and $5,000 in a silver mine. 
C)  Invest the $10,000 in four different home builders. 
D)  Invest $10,000 in ten different oil companies. 
E)  Invest $10,000 in a large-cap mutual fund.

Question 4

Which of the following issues do Ryerson and Groh disagree about?

Accepted Answer

A)  whether the risk of investing is worthwhile 
B)  whether savings accounts bear interest 
C)  whether companies issue stocks in order to raise funds 
D)  whether anyone makes money by investing in stocks 
E)  whether investing always carries risk with it 
A)  whether the risk of investing is worthwhile 
B)  whether savings accounts bear interest 
C)  whether companies issue stocks in order to raise funds 
D)  whether anyone makes money by investing in stocks 
E)  whether investing always carries risk with it

Question 5

Hugh is an investor who opts for no-risk U.S. Treasury Bills and intermediate-term high-grade corporate bonds. What kind of investor is Hugh?

Accepted Answer

A)  professional 
B)  aggressive 
C)  amateur 
D)  conservative 
E)  sporadic 
A)  professional 
B)  aggressive 
C)  amateur 
D)  conservative 
E)  sporadic

Question 6

Which of the following receives and executes buy-and-sell orders for other people in return for commissions?

Accepted Answer

A)  stock exchanges 
B)  stock brokers 
C)  investment banks 
D)  stock agents 
E)  savings banks 
A)  stock exchanges 
B)  stock brokers 
C)  investment banks 
D)  stock agents 
E)  savings banks

Question 7

Which of the following assumptions does Groh make?

Accepted Answer

A)  Inflation can outpace any interest rate. 
B)  Given enough time, any stock will eventually go up in value. 
C)  The riskier the investment, the more value it will have over a long period of time. 
D)  The more stocks you invest in, the higher their value will be. 
E)  The stock market overall will experience net growth over time. 
A)  Inflation can outpace any interest rate. 
B)  Given enough time, any stock will eventually go up in value. 
C)  The riskier the investment, the more value it will have over a long period of time. 
D)  The more stocks you invest in, the higher their value will be. 
E)  The stock market overall will experience net growth over time.

Question 8

An exchange-traded fund (ETF) is a bundle of stocks (or bonds) that are in an index that tracks the overall movement of a market.

Accepted Answer

A) True 
 B)False

Question 9

Peter Kim wanted to buy a new car. To help finance the purchase, he decided to sell his Organic Markets bond in the secondary market. Peter's bond had a par value of $10,000 and a coupon of 6 percent. Current interest rates were 3 percent. What would Peter's bond sell for?

Accepted Answer

A)  for par value 
B)  for $10,600 
C)  at a discount to par value 
D)  for $9,700 
E)  at a premium to par value 
A)  for par value 
B)  for $10,600 
C)  at a discount to par value 
D)  for $9,700 
E)  at a premium to par value

Question 10

Stocks are known as securities because they represent a secured interest in a company.

Accepted Answer

A) True 
 B)False

Question 11

Hector Rivera was interested in buying shares of ABC Computer Corp, which was currently trading at $50 per share. Analysts expected the share price to rise sharply in the next few months. Hector decided to buy a call option for $400, giving him the right to purchase 100 shares of ABC Computer for $60 per share at any time between his purchase and the option's expiration date. Three months later at the expiration date, ABC stock was trading at $73. Hector used his option and purchased 100 shares of ABC Computer. How much money could Hector have saved had he bought the shares three months earlier instead of the call option?

Accepted Answer

A)  $1,400 
B)  $400 
C)  $1,000 
D)  $2,300 
E)  $200 
A)  $1,400 
B)  $400 
C)  $1,000 
D)  $2,300 
E)  $200

Question 12

In a secondary securities market, new stocks and bonds are bought and sold by firms and governments.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following, if True, would undermine Groh's point about diversification?

Accepted Answer

A)  Not every investor can afford every stock. 
B)  The value of some stocks drop and never recover. 
C)  When one stock value drops, others tend to also drop. 
D)  Some investors prefer as little risk as possible when investing. 
E)  The value of some stock is greater than others. 
A)  Not every investor can afford every stock. 
B)  The value of some stocks drop and never recover. 
C)  When one stock value drops, others tend to also drop. 
D)  Some investors prefer as little risk as possible when investing. 
E)  The value of some stock is greater than others.

Question 14

The New York Stock Exchange, the world's oldest electronic stock market, has orders gathered and executed on a computer network.

Accepted Answer

A) True 
 B)False

Question 15

What is the term for a division of stock that gives stockholders a greater number of shares but does not change each individual's proportionate share of ownership?

Accepted Answer

A)  stock dividend 
B)  stock split 
C)  stock yield 
D)  stock warrant 
E)  stock exchange 
A)  stock dividend 
B)  stock split 
C)  stock yield 
D)  stock warrant 
E)  stock exchange

Question 16

The time it takes to double an investment can be estimated by using which of the following?

Accepted Answer

A)  book value 
B)  the Rule of 72 
C)  blue-chips 
D)  dividends 
E)  market value 
A)  book value 
B)  the Rule of 72 
C)  blue-chips 
D)  dividends 
E)  market value

Question 17

Explain the principle of compound growth.

Accepted Answer

Time value stems from the principle of c

Question 18

The Dow Jones Industrial Average (DJIA) has remained unchanged in recent years.

Accepted Answer

A) True 
 B)False

Question 19

What is the term for the proportion of funds invested in each of several investment alternatives?

Accepted Answer

A)  spreading 
B)  shorting 
C)  margin buying 
D)  asset allocation 
E)  diversification 
A)  spreading 
B)  shorting 
C)  margin buying 
D)  asset allocation 
E)  diversification

Question 20

What is a stock's market value?

Accepted Answer

A)  the current price of a share of stock in the stock market 
B)  the average price of one share of stock over the past year 
C)  the face value of a share of stock, set by the issuing company's board of directors 
D)  the price of the stock plus the previous year's dividend 
E)  the monthly average of a stock's price over a year 
A)  the current price of a share of stock in the stock market 
B)  the average price of one share of stock over the past year 
C)  the face value of a share of stock, set by the issuing company's board of directors 
D)  the price of the stock plus the previous year's dividend 
E)  the monthly average of a stock's price over a year

What is the term for buying several different kinds of investments rather than just one?

Which of the following, if True, would undermine Ryerson's argument?

Which of the following issues do Ryerson and Groh disagree about?

Hugh is an investor who opts for no-risk U.S. Treasury Bills and intermediate-term high-grade corporate bonds. What kind of investor is Hugh?

Which of the following receives and executes buy-and-sell orders for other people in return for commissions?

Which of the following assumptions does Groh make?

An exchange-traded fund (ETF) is a bundle of stocks (or bonds) that are in an index that tracks the overall movement of a market.

Peter Kim wanted to buy a new car. To help finance the purchase, he decided to sell his Organic Markets bond in the secondary market. Peter's bond had a par value of $10,000 and a coupon of 6 percent. Current interest rates were 3 percent. What would Peter's bond sell for?

Stocks are known as securities because they represent a secured interest in a company.

In a secondary securities market, new stocks and bonds are bought and sold by firms and governments.

Which of the following, if True, would undermine Groh's point about diversification?

The New York Stock Exchange, the world's oldest electronic stock market, has orders gathered and executed on a computer network.

What is the term for a division of stock that gives stockholders a greater number of shares but does not change each individual's proportionate share of ownership?

The time it takes to double an investment can be estimated by using which of the following?

Explain the principle of compound growth.

The Dow Jones Industrial Average (DJIA) has remained unchanged in recent years.

What is the term for the proportion of funds invested in each of several investment alternatives?

What is a stock's market value?

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Exam 16: Managing Finances

What is the term for buying several different kinds of investments rather than just one?

Which of the following, if True, would undermine Ryerson's argument?

Which of the following issues do Ryerson and Groh disagree about?

Hugh is an investor who opts for no-risk U.S. Treasury Bills and intermediate-term high-grade corporate bonds. What kind of investor is Hugh?

Which of the following receives and executes buy-and-sell orders for other people in return for commissions?

Which of the following assumptions does Groh make?

An exchange-traded fund (ETF) is a bundle of stocks (or bonds) that are in an index that tracks the overall movement of a market.

Peter Kim wanted to buy a new car. To help finance the purchase, he decided to sell his Organic Markets bond in the secondary market. Peter's bond had a par value of $10,000 and a coupon of 6 percent. Current interest rates were 3 percent. What would Peter's bond sell for?

Stocks are known as securities because they represent a secured interest in a company.

In a secondary securities market, new stocks and bonds are bought and sold by firms and governments.

Which of the following, if True, would undermine Groh's point about diversification?

The New York Stock Exchange, the world's oldest electronic stock market, has orders gathered and executed on a computer network.

What is the term for a division of stock that gives stockholders a greater number of shares but does not change each individual's proportionate share of ownership?

The time it takes to double an investment can be estimated by using which of the following?

Explain the principle of compound growth.

The Dow Jones Industrial Average (DJIA) has remained unchanged in recent years.

What is the term for the proportion of funds invested in each of several investment alternatives?

What is a stock's market value?

The Us Business Environment

Business Ethics and Social Responsibility

Entrepreneurship, New Ventures, and Business Ownership

The Global Context of Business

Business Management

Organizing the Business

Operations Management and Quality

Employee Behavior and Motivation

Leadership and Decision Making

Human Resource Management and Labor Relations

Marketing Processes and Consumer Behavior

Pricing, Distributing, and Promoting Products

Information Technology for Business

The Role of Accountants and Accounting Information

Money and Banking

Filters