Question 1

Clarify the difference between systematic and unsystematic risk.

Accepted Answer

Systematic risk is that portion of a sec

Question 2

Day trading is considered to be a safe,conservative investment practice.

Accepted Answer

A) True 
 B)False

Question 3

When placing a market order to purchase shares of stock,you will be required to make the order good-till-canceled.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following investors will potentially receive dividends on their investments?

Accepted Answer

A) Bondholders 
B) Stockholders 
C) Debt holders 
D) Derivative holders 
E) Both B and D are correct. 
A) Bondholders 
B) Stockholders 
C) Debt holders 
D) Derivative holders 
E) Both B and D are correct.

Question 5

The real rate of return can never be a negative number.

Accepted Answer

A) True 
 B)False

Question 6

Jeffery is an underwriter and sells shares on the ________ market for his job.However,in his personal investment life,he will purchase his stocks through the ________ market.

Accepted Answer

A) primary;secondary 
B) secondary;primary 
C) primary;bond 
D) open;closed 
E) none of the above 
A) primary;secondary 
B) secondary;primary 
C) primary;bond 
D) open;closed 
E) none of the above

Question 7

Louis purchased $5,000 worth of stock three years ago and sold it today for $7,000.He received no dividends from this investment.Inflation averaged 4% during the three years he owned the stock.What was his annualized real rate of return on this investment?

Accepted Answer

A) 4% 
B) 9.33% 
C) 13.33% 
D) 36% 
E) 40% 
A) 4% 
B) 9.33% 
C) 13.33% 
D) 36% 
E) 40%

Question 8

Risk capacity refers to the strength of your financial safety net.

Accepted Answer

A) True 
 B)False

Question 9

Market risk is the risk of fluctuations in security prices due to changes in the market interest rate.

Accepted Answer

A) True 
 B)False

Question 10

Because Nancy is extremely risk averse she is less likely to receive a solid rate of return on her investment portfolio than Babby who is more accepting of a risky portfolio.

Accepted Answer

A) True 
 B)False

Question 11

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of Microsoft at $150 per share.The price increases to $175 per share.What is the net value of your investment (margin)now?

Accepted Answer

A) $17,500 
B) $15,000 
C) $ 7,500 
D) $ 3,750 
E) None of the above 
A) $17,500 
B) $15,000 
C) $ 7,500 
D) $ 3,750 
E) None of the above

Question 12

Amy and Bob have decided to borrow a portion of the purchase price of stocks from their broker.They will then have a ________ account.

Accepted Answer

A) cash 
B) round lot 
C) margin 
D) debtor 
E) combination 
A) cash 
B) round lot 
C) margin 
D) debtor 
E) combination

Question 13

Investing in assets such as collectable Barbie Dolls or Beanie Babies are both example of speculating.

Accepted Answer

A) True 
 B)False

Question 14

Investing in bonds is generally less risky than investing in stocks.

Accepted Answer

A) True 
 B)False

Question 15

________ risk is simply the variability in the returns of an investment that is due to events that are unrelated to the overall market.

Accepted Answer

A) Systematic 
B) Unsystematic 
C) Non-diversifiable 
D) Portfolio 
A) Systematic 
B) Unsystematic 
C) Non-diversifiable 
D) Portfolio

Question 16

Provide an explanation for the concept of asset allocation in investing and differentiate between the 3 stages.

Accepted Answer

Asset allocation attempts to ensure that

Question 17

What is the purpose of a margin account and using margin to purchase stocks?

Accepted Answer

A) A margin account allows you to purchase stocks without using any of your own money. 
B) A margin account allows you to purchase more shares than you could afford to purchase using only your own money. 
C) Using margin to purchase more shares gives you the potential to earn a higher return on your investment. 
D) All of the above are correct. 
E) Only B and C are correct. 
A) A margin account allows you to purchase stocks without using any of your own money. 
B) A margin account allows you to purchase more shares than you could afford to purchase using only your own money. 
C) Using margin to purchase more shares gives you the potential to earn a higher return on your investment. 
D) All of the above are correct. 
E) Only B and C are correct.

Question 18

Principle #4,taxes affect personal finance decisions,tells us that several points hold true regardless of what we invest in.Jason found a point that was included on the list in error.Which of the following is it?

Accepted Answer

A) The marginal tax rate is the rate you pay on the next dollar of earnings. 
B) Tax-free investments should be compared on a before-tax basis. 
C) You should consider tax-deferred investments. 
D) Capital gains are better than ordinary income when it comes to taxes. 
E) The higher your marginal tax bracket,the more attractive tax-free investments become. 
A) The marginal tax rate is the rate you pay on the next dollar of earnings. 
B) Tax-free investments should be compared on a before-tax basis. 
C) You should consider tax-deferred investments. 
D) Capital gains are better than ordinary income when it comes to taxes. 
E) The higher your marginal tax bracket,the more attractive tax-free investments become.

Question 19

One of the most important types of risk associated with real estate is the liquidity risk.

Accepted Answer

A) True 
 B)False

Question 20

Which organization would handle frequently traded OTC stock,bonds,and foreign stock?

Accepted Answer

The over the counter market handles freq

Clarify the difference between systematic and unsystematic risk.

Day trading is considered to be a safe,conservative investment practice.

When placing a market order to purchase shares of stock,you will be required to make the order good-till-canceled.

Which of the following investors will potentially receive dividends on their investments?

The real rate of return can never be a negative number.

Jeffery is an underwriter and sells shares on the market for his job.However,in his personal investment life,he will purchase his stocks through the market.

Louis purchased $5,000 worth of stock three years ago and sold it today for $7,000.He received no dividends from this investment.Inflation averaged 4% during the three years he owned the stock.What was his annualized real rate of return on this investment?

Risk capacity refers to the strength of your financial safety net.

Market risk is the risk of fluctuations in security prices due to changes in the market interest rate.

Because Nancy is extremely risk averse she is less likely to receive a solid rate of return on her investment portfolio than Babby who is more accepting of a risky portfolio.

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of Microsoft at $150 per share.The price increases to $175 per share.What is the net value of your investment (margin)now?

Amy and Bob have decided to borrow a portion of the purchase price of stocks from their broker.They will then have a ________ account.

Investing in assets such as collectable Barbie Dolls or Beanie Babies are both example of speculating.

Investing in bonds is generally less risky than investing in stocks.

________ risk is simply the variability in the returns of an investment that is due to events that are unrelated to the overall market.

Provide an explanation for the concept of asset allocation in investing and differentiate between the 3 stages.

What is the purpose of a margin account and using margin to purchase stocks?

Principle #4,taxes affect personal finance decisions,tells us that several points hold true regardless of what we invest in.Jason found a point that was included on the list in error.Which of the following is it?

One of the most important types of risk associated with real estate is the liquidity risk.

Which organization would handle frequently traded OTC stock,bonds,and foreign stock?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

Exam 11: Investment Basics

Clarify the difference between systematic and unsystematic risk.

Day trading is considered to be a safe,conservative investment practice.

When placing a market order to purchase shares of stock,you will be required to make the order good-till-canceled.

Which of the following investors will potentially receive dividends on their investments?

The real rate of return can never be a negative number.

Jeffery is an underwriter and sells shares on the ________ market for his job.However,in his personal investment life,he will purchase his stocks through the ________ market.

Louis purchased $5,000 worth of stock three years ago and sold it today for $7,000.He received no dividends from this investment.Inflation averaged 4% during the three years he owned the stock.What was his annualized real rate of return on this investment?

Risk capacity refers to the strength of your financial safety net.

Market risk is the risk of fluctuations in security prices due to changes in the market interest rate.

Because Nancy is extremely risk averse she is less likely to receive a solid rate of return on her investment portfolio than Babby who is more accepting of a risky portfolio.

Assume you have a margin account with a 50% initial margin.You purchase 100 shares of Microsoft at $150 per share.The price increases to $175 per share.What is the net value of your investment (margin)now?

Amy and Bob have decided to borrow a portion of the purchase price of stocks from their broker.They will then have a ________ account.

Investing in assets such as collectable Barbie Dolls or Beanie Babies are both example of speculating.

Investing in bonds is generally less risky than investing in stocks.

________ risk is simply the variability in the returns of an investment that is due to events that are unrelated to the overall market.

Provide an explanation for the concept of asset allocation in investing and differentiate between the 3 stages.

What is the purpose of a margin account and using margin to purchase stocks?

Principle #4,taxes affect personal finance decisions,tells us that several points hold true regardless of what we invest in.Jason found a point that was included on the list in error.Which of the following is it?

One of the most important types of risk associated with real estate is the liquidity risk.

Which organization would handle frequently traded OTC stock,bonds,and foreign stock?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

Jeffery is an underwriter and sells shares on the market for his job.However,in his personal investment life,he will purchase his stocks through the market.