Exam 20: B: Understanding Personal Finances and Investments

When Kathy Wright completed her training, she expected to be given a stockbroker's position. Instead, she is an account executive. This is a better descriptive term than stockbroker because she actually buys and sells all types of securities, not just stock.

The market value is the price of one share of a stock at a particular time.

Dividends paid to investors who purchase preferred stock are paid before dividends are paid to common stockholders.

A blue-chip stock is an investment that generally attracts a high-risk or speculative investor.

To be useful, investment goals must be specific and measurable.

Investments in the stock issued by new, start-up companies are an excellent way to generate investment income.

An important, and often first, warning sign of credit card trouble is the inability to pay you entire balance each month.

Over many years, managed funds outperform index funds.

There are no guarantees that a stock will increase in value after a stock split.

Morningstar provides detailed financial information about corporate bonds.

A dividend that is paid in the form of additional shares of ownership is called a stock dividend.

John Mathews purchased a corporate bond with a face value of $1,000 and a stated interest rate of 8 percent; he will receive an $80 interest payment twice a year.

Because of the cost, most investors are unable to obtain research information about stock investments by using the Internet.

The Securities Exchange Act of 1934 created the Securities and Exchange Commission.

Shares in an exchange-traded fund (ETF) are available only from the investment company that sponsors the ETF.

A limit order is a request that a stock be bought or sold at a price equal to or better than some specified price.

There is rarely a commission charged for purchasing mutual funds.

The family-of-funds concept allows investors to exchange shares in one mutual fund for shares in another fund providing that the investor is willing to pay a 10 percent penalty of the value of the funds transferred.

Standard & Poor's, Value Line, and Mergent, Inc., provide professional advisory and investment services.

Over a long time period, real estate ownership represents one of the best hedges against inflation.