Question 1

As the number of stocks in your portfolio increases

Accepted Answer

A) the variability in your portfolio increases. 
B) the systematic risk in your portfolio increases. 
C) the unsystematic risk in your portfolio increases. 
D) none of the above. 
A) the variability in your portfolio increases. 
B) the systematic risk in your portfolio increases. 
C) the unsystematic risk in your portfolio increases. 
D) none of the above.

Question 2

A sale of a security in the primary markets is the only time the issuing company receives the proceeds from the sale.

Accepted Answer

A) True 
 B)False

Question 3

The ________ plays on the fear of regret and the seeking of pride,resulting in selling winning stocks too soon and keeping losing stocks too long.

Accepted Answer

A) disposition effect 
B) reluctance effect 
C) house money effect 
D) overconfidence effect 
A) disposition effect 
B) reluctance effect 
C) house money effect 
D) overconfidence effect

Question 4

Suppose that you are beginning an investment plan.You have decided that you want to retire in 30 years with $1,000,000 in your bank account at that time.How much would you need to invest at the end each of the next 30 years if you could earn 8%?

Accepted Answer

A) $11,924,613.33 
B) $83,860.16 
C) $46,030.93 
D) $22,045.16 
E) $8,827.43 
A) $11,924,613.33 
B) $83,860.16 
C) $46,030.93 
D) $22,045.16 
E) $8,827.43

Question 5

Particularly,during election years,investors should make themselves aware of the risk resulting from unanticipated changes in the tax or legal environment.This is classified as political and regulatory risk.

Accepted Answer

A) True 
 B)False

Question 6

What type of investment would have a high risk premium associated with political and regulatory risk?

Accepted Answer

A) A drug company 
B) A casino company 
C) A tobacco company 
D) All of the above are correct. 
A) A drug company 
B) A casino company 
C) A tobacco company 
D) All of the above are correct.

Question 7

Interest rate risk says that if market interest rates rise the price of outstanding bonds will fall.This means that interest rates and bond prices have an ________ relationship?

Accepted Answer

A) Par 
B) Lock-step 
C) Exchange rate 
D) Inverse 
A) Par 
B) Lock-step 
C) Exchange rate 
D) Inverse

Question 8

An investor owns stock from seven different companies,two rental houses,and three government bonds.Together these assets are considered to be the investor's

Accepted Answer

A) collection. 
B) derivative holding. 
C) asset class. 
D) portfolio. 
E) none of the above. 
A) collection. 
B) derivative holding. 
C) asset class. 
D) portfolio. 
E) none of the above.

Question 9

Market risk deals with the inability to sell a security quickly at fair market value.

Accepted Answer

A) True 
 B)False

Question 10

A prerequisite to investing is to perform a financial reality check.Explain its 3 parts.

Accepted Answer

Balance your budget.If you do not live w

Question 11

You have just purchased shares of stock from a stockbroker.These shares were previously traded on the NYSE.This trade took place in the

Accepted Answer

A) primary market. 
B) secondary market. 
C) tertiary market. 
D) quaternary market. 
E) none of the above. 
A) primary market. 
B) secondary market. 
C) tertiary market. 
D) quaternary market. 
E) none of the above.

Question 12

An over-the-counter market has a physical location where trading occurs.

Accepted Answer

A) True 
 B)False

Question 13

How does the principle of diversification work?

Accepted Answer

Diversification eliminates risk by inves

Question 14

Principle 8,Risk and Return go hand in hand,tells us that you ________ as the length of the investment horizon ________.

Accepted Answer

A) can afford to take on additional risk;increases 
B) can afford to take on additional risk;decreases 
C) cannot afford not to take on additional risk;shortens 
D) cannot afford to take on additional risk;increases 
A) can afford to take on additional risk;increases 
B) can afford to take on additional risk;decreases 
C) cannot afford not to take on additional risk;shortens 
D) cannot afford to take on additional risk;increases

Question 15

Our study of efficient markets tells us all of the following about investing except

Accepted Answer

A) do not try to time the market - stay with your plan. 
B) long-term investing is your best bet,not systems. 
C) go with the best investment advisor money can buy. 
D) focus on effective asset allocation. 
E) diversify and seek help if you don't feel comfortable. 
A) do not try to time the market - stay with your plan. 
B) long-term investing is your best bet,not systems. 
C) go with the best investment advisor money can buy. 
D) focus on effective asset allocation. 
E) diversify and seek help if you don't feel comfortable.

Question 16

A group of 100 shares of common stock is referred to as a(n)

Accepted Answer

A) odd lot. 
B) round lot. 
C) even lot. 
D) square lot. 
E) none of the above. 
A) odd lot. 
B) round lot. 
C) even lot. 
D) square lot. 
E) none of the above.

Question 17

Stocks represent a legal obligation for the issuing company to pay dividends,whether the company has made a profit or not.

Accepted Answer

A) True 
 B)False

Question 18

Purchasing derivatives is a form of speculating.

Accepted Answer

A) True 
 B)False

Question 19

When trading there are "round trip" costs in that you will pay costs when you buy securities and when you sell securities.

Accepted Answer

A) True 
 B)False

Question 20

You can make investments on a ________ basis,which means that not only does your investment grow free of taxes,but the money you invest isn't taxed until you liquidate your investment.

Accepted Answer

A) tax-eliminated 
B) progressive tax 
C) tax-deferred 
D) asset management 
A) tax-eliminated 
B) progressive tax 
C) tax-deferred 
D) asset management

As the number of stocks in your portfolio increases

A sale of a security in the primary markets is the only time the issuing company receives the proceeds from the sale.

The ________ plays on the fear of regret and the seeking of pride,resulting in selling winning stocks too soon and keeping losing stocks too long.

Suppose that you are beginning an investment plan.You have decided that you want to retire in 30 years with $1,000,000 in your bank account at that time.How much would you need to invest at the end each of the next 30 years if you could earn 8%?

Particularly,during election years,investors should make themselves aware of the risk resulting from unanticipated changes in the tax or legal environment.This is classified as political and regulatory risk.

What type of investment would have a high risk premium associated with political and regulatory risk?

Interest rate risk says that if market interest rates rise the price of outstanding bonds will fall.This means that interest rates and bond prices have an ________ relationship?

An investor owns stock from seven different companies,two rental houses,and three government bonds.Together these assets are considered to be the investor's

Market risk deals with the inability to sell a security quickly at fair market value.

A prerequisite to investing is to perform a financial reality check.Explain its 3 parts.

You have just purchased shares of stock from a stockbroker.These shares were previously traded on the NYSE.This trade took place in the

An over-the-counter market has a physical location where trading occurs.

How does the principle of diversification work?

Principle 8,Risk and Return go hand in hand,tells us that you as the length of the investment horizon .

Our study of efficient markets tells us all of the following about investing except

A group of 100 shares of common stock is referred to as a(n)

Stocks represent a legal obligation for the issuing company to pay dividends,whether the company has made a profit or not.

Purchasing derivatives is a form of speculating.

When trading there are "round trip" costs in that you will pay costs when you buy securities and when you sell securities.

You can make investments on a ________ basis,which means that not only does your investment grow free of taxes,but the money you invest isn't taxed until you liquidate your investment.

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

As the number of stocks in your portfolio increases

A sale of a security in the primary markets is the only time the issuing company receives the proceeds from the sale.

The ________ plays on the fear of regret and the seeking of pride,resulting in selling winning stocks too soon and keeping losing stocks too long.

Suppose that you are beginning an investment plan.You have decided that you want to retire in 30 years with $1,000,000 in your bank account at that time.How much would you need to invest at the end each of the next 30 years if you could earn 8%?

Particularly,during election years,investors should make themselves aware of the risk resulting from unanticipated changes in the tax or legal environment.This is classified as political and regulatory risk.

What type of investment would have a high risk premium associated with political and regulatory risk?

Interest rate risk says that if market interest rates rise the price of outstanding bonds will fall.This means that interest rates and bond prices have an ________ relationship?

An investor owns stock from seven different companies,two rental houses,and three government bonds.Together these assets are considered to be the investor's

Market risk deals with the inability to sell a security quickly at fair market value.

A prerequisite to investing is to perform a financial reality check.Explain its 3 parts.

You have just purchased shares of stock from a stockbroker.These shares were previously traded on the NYSE.This trade took place in the

An over-the-counter market has a physical location where trading occurs.

How does the principle of diversification work?

Principle 8,Risk and Return go hand in hand,tells us that you ________ as the length of the investment horizon ________.

Our study of efficient markets tells us all of the following about investing except

A group of 100 shares of common stock is referred to as a(n)

Stocks represent a legal obligation for the issuing company to pay dividends,whether the company has made a profit or not.

Purchasing derivatives is a form of speculating.

When trading there are "round trip" costs in that you will pay costs when you buy securities and when you sell securities.

You can make investments on a ________ basis,which means that not only does your investment grow free of taxes,but the money you invest isn't taxed until you liquidate your investment.

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

Principle 8,Risk and Return go hand in hand,tells us that you as the length of the investment horizon .