Exam 11: Investment Basics

Tran purchased a house for a rental property for $100,000 five years ago.During the time he owned this rental,his net rental income was a total of $4,000.He just sold the property for $120,000.What was his average annual return on this investment?

Churning occurs when a broker engages in excessive trading in a client's security account to generate more commissions for the broker.

As investors,we can try to diversify away ________ risk but we are still left with the ________ risk that can't be eliminated through diversification.

Any company can have its securities listed on the NYSE.

Hostess and Kodak recently filed for bankruptcy protection in an attempt to restructure their debts.One could assume that both of these companies experienced too much ________ risk.

The herd behavior effect involves the emotions of fearing regret and seeking pride,resulting in selling winners too soon and keeping losers too long.

Latisha invested $1,000 in XYZ stock.Two years later she sold the stock for $1,200.During the time she owned the stock,she received a total of $80 in dividends.What was her total return on this investment?

A good source of investment advice is a neutral party that doesn't charge a fee or earn a commission from you.

A 60-year-old investor should not be too concerned about liquidity and market risk in their retirement portfolio.

A circuit breaker protects individual investors from losing money on their investments.

The share price is always less with a round lot than with an odd lot purchase.

Because it's difficult to beat the market,make sure you don't give away too much of your return in the way of commissions.

All of the following are ordering alternatives that specify the timeframe within which you want your order filled except

Explain the purpose of a brokerage account and the 3 types of brokers.

You are considering the purchase of a corporation's stock.You have noted that this particular corporation has a high use of debt,which is associated with ________ risk.

You believe that the stock of MoabBikes will soon fall from its current price of $25 per share.You short 1,000 shares with your broker who has a 50% margin requirement.The price falls to $15 per share,but not before it pays a $5 dividend per share.Your commissions and other charges totaled $50.What was your total profit?

The Insider Trading Sanctions Act of 1984 and the Insider Trading and Securities Fraud Enforcement Act of 1988 made it illegal to trade while in the possession of inside information,or "material" non-public information held by

Unsystematic risk cannot be eliminated through diversification.

What type of broker can protect your investments from systematic risk?

The more efficient the market,the faster prices react to new information.