Exam 11: Investment Planning

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -The collection of investments you select to meet your investment goals is called your [portfolio | allocation].

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -Speculative trading is [illegal | risky].

A retired couple can probably bear more risk in their portfolio than a young investor with a secure job.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -The closing price of this stock on the previous day was [higher | lower] than today's close.

There are a variety of investment vehicles including which of the following?

The major reason most people invest is to shelter current income from taxes.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -A(n) [underwriting | prospectus] is a document made available to prospective security buyers that describes the firm and a new security issue.

A corporation's annual stockholders' report provides financial data and other information related to both past and planned activities.

Abe owns 1000 shares of Super Tech Corporation,which he purchased for $12 per share 3 months ago.Abe just checked the price of Super Tech and found that it is selling for $19 per share.He is so excited about his gain that he has booked a $6,000 20-day trip to Hawaii for him and his wife.He wants to be sure that the trip will be paid for entirely from gains in his Super Tech shares because his wife has been nagging him about his frequent stock trading habit and he feels that this trip will demonstrate to her once and for all that he has the skills,acumen and instincts to get rich by trading stocks.He feels strongly that the price of Super Tech stock will go through the roof in the intermediate term but is concerned about short-term volatility.Abe's plan is to sell the shares only if the value of his shares either declines below $18,000 or if the value climbs to $30,000.He would like to submit his stock orders right now,because for the next three weeks it is very important to his marriage that he not trade or even follow the market (maybe just a peek at CNBC while his wife is in the shower).Which of the following set of stock orders would accomplish his goals?

Long-term securities are traded only in the primary markets.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -A [bull | bear] market is characterized by falling stock prices.

An unmarried investor with few responsibilities should be able to accept _____ better than two people who are married with young children.

The single most important reason for investing is for:

During a bull market:

Once one's asset allocation plan is developed and securities are selected,these decisions do not have to be made again until there is a major life change.

Prices are rising in bear markets,indicating economic optimism.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -Diversification should [reduce the possibility of losing all your money | have little impact on the risk of losing money].

When you buy 300 shares of a company you have purchased:

Which of the following is an order to sell a stock when the market price drops to or below a specified level?

There is a trade-off between earning a high current income from an investment and obtaining significant capital appreciation from it.