Exam 11: Investment Basics

An ask on offer price is one at which an individual is willing to sell a security.

You recently purchased 100 shares of stock at $15 per share.The stock is now worth $20 per share,and it paid a $2 dividend during the time you held it.Your rate of return on this stock is closest to which of the following?

Stocks are initially sold in the primary markets with the help of an investment banker serving as the underwriter.

The two major organized stock exchanges in the Unites States are the ________ and the ________.

While studying the chapter on investments in Personal Finance,Becky Hargrith found out that the ________ is equal to the real rate of return plus the rate of inflation.

The disposition effect involves

Cretia Robritti discovered that the purpose of asset allocation is to ensure that the investor is ________,generally with holdings in several different ________ of investments.

A prospectus is an advertisement placed in a newspaper or magazine that provides a listing of the underwriting syndicate involved in the new offering,in addition to basic information on the offering.

Many people never consider or think of the sources of risk that affect their investments.Which of the following is a risk associated with investing?

The NASDAQ is the largest electronic stock exchange.

What requires you to add cash or securities when the value drops below a specified amount?

If you bought a 20-year bond issued by the government,with a par value of $1,000 and an interest rate of 8%.At maturity you will be returned the principal of

Paula bought a stock for $200 last year and sold it today for $150.If she earned a dividend of $100 while she held the stock her rate of return was

A(n)________ is a marketable document (a receipt)that certifies a bank holds shares of a foreign firm's stock that backs the receipt.

Patti DeVry has been trading stocks in the over-the-counter market.When she wants to sell her stocks she will specify the ________ price and when she wants to purchase stocks she will specify the ________ price.

Diversification lowers risk,but it also lowers the expected return.

Barney Q.Hopkins borrows stock from his broker (short selling)with the goal of ________ and ________.

Asset allocation has to do with how your money should be divided among which of the following?

One should keep in mind that when it comes to tax advantages,________ is/are better than ________.

Petrina was told by a successful friend to invest in stocks and income-producing real estate.Both of these are examples of ________ investments.