Question 1

______ mutual fund managers can consistently beat the market average.

Accepted Answer

A)  All 
B)  No 
C)  Relatively many 
D)  Relatively few 
A)  All 
B)  No 
C)  Relatively many 
D)  Relatively few

Question 2

What most likely happened to the stock for Apple because of the iPhone and iPad? Explain using a demand and supply graph.

Accepted Answer

The demand for the Apple stock

Question 3

In a given year,the S&P 500 Index fund outperforms about ______ of all active funds.

Accepted Answer

A)  20% 
B)  40% 
C)  60% 
D)  80% 
A)  20% 
B)  40% 
C)  60% 
D)  80%

Question 4

Stock market bubbles have real effects in the economy because:

Accepted Answer

A)  overvalued stocks cause inflationary effects in the economy. 
B)  overvalued stocks violate the efficient markets hypothesis. 
C)  overvalued stocks divert capital to less-productive uses. 
D)  when these bubbles burst,they raise the value of capital in those industries. 
A)  overvalued stocks cause inflationary effects in the economy. 
B)  overvalued stocks violate the efficient markets hypothesis. 
C)  overvalued stocks divert capital to less-productive uses. 
D)  when these bubbles burst,they raise the value of capital in those industries.

Question 5

Mutual funds can let you invest in hundreds of stocks with just one purchase.

Accepted Answer

A) True 
 B)False

Question 6

One best reduces risk by buying ______ stocks in ______ geographic regions.

Accepted Answer

A)  few;few 
B)  few;many 
C)  many;few 
D)  many;many 
A)  few;few 
B)  few;many 
C)  many;few 
D)  many;many

Question 7

According to the rule of 70,if the interest rate on a bank deposit is 5% per year,how long will it take for the bank deposit to double in value?

Accepted Answer

A)  25 years 
B)  20 years 
C)  14 years 
D)  It depends on the amount of bank deposit. 
A)  25 years 
B)  20 years 
C)  14 years 
D)  It depends on the amount of bank deposit.

Question 8

The prices of traded assets,such as stocks and bonds,reflect all publicly available information.

Accepted Answer

A) True 
 B)False

Question 9

Around the year 2000,there was a ______ in _______.

Accepted Answer

A)  boom and bust;tech stocks 
B)  boom and bust;housing prices 
C)  speculative bubble;crayons 
D)  speculative bubble;oysters 
A)  boom and bust;tech stocks 
B)  boom and bust;housing prices 
C)  speculative bubble;crayons 
D)  speculative bubble;oysters

Question 10

Which is NOT a major stock index?

Accepted Answer

A)  The Heathrow 2,000 
B)  The Dow Jones Industrial Average 
C)  The Standard and Poor's 500 
D)  The NASDAQ Composite Index 
A)  The Heathrow 2,000 
B)  The Dow Jones Industrial Average 
C)  The Standard and Poor's 500 
D)  The NASDAQ Composite Index

Question 11

If the efficient markets hypothesis holds,then only investors with inside information can earn a return higher than the stock market average return.

Accepted Answer

A) True 
 B)False

Question 12

The risk-return trade-off is an example of:

Accepted Answer

A)  the sunk cost principle. 
B)  the no free lunch principle. 
C)  the capitalist principle. 
D)  the inelastic principle. 
A)  the sunk cost principle. 
B)  the no free lunch principle. 
C)  the capitalist principle. 
D)  the inelastic principle.

Question 13

Which of the following are advantages of saving your money in a mutual fund? I.You have professional fund management.
II.Mutual funds have always outperformed the S&P 500.
III.People with smaller amounts of money can diversify risk.

Accepted Answer

A)  I only 
B)  I and II only 
C)  I and III only 
D)  I,II,and III 
A)  I only 
B)  I and II only 
C)  I and III only 
D)  I,II,and III

Question 14

Which of the following investment instruments would a risk-averse individual choose?

Accepted Answer

A)  stocks that are negatively correlated with the rest of one's portfolio 
B)  agricultural stocks in a foreign agricultural economy 
C)  oil stocks 
D)  technology stocks 
A)  stocks that are negatively correlated with the rest of one's portfolio 
B)  agricultural stocks in a foreign agricultural economy 
C)  oil stocks 
D)  technology stocks

Question 15

Mutual funds with high fees:

Accepted Answer

A)  tend to perform better than funds with low fees. 
B)  are usually passive funds. 
C)  should be avoided because high fees reduce your return. 
D)  are poor performers in the short run but provide above-market returns if held for a decade or longer. 
A)  tend to perform better than funds with low fees. 
B)  are usually passive funds. 
C)  should be avoided because high fees reduce your return. 
D)  are poor performers in the short run but provide above-market returns if held for a decade or longer.

Question 16

Popular U.S.stock indexes include: I.FDIC
II.Dow Jones Industrial Average
III.NASDAQ

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I,II,and III 
A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I,II,and III

Question 17

The efficient markets hypothesis states that:

Accepted Answer

A)  the price of assets already reflects all publicly available information. 
B)  arbitrage is impossible in financial markets. 
C)  in financial markets both buyers and sellers will be equally informed. 
D)  financial markets are,on average,more efficient than product markets. 
A)  the price of assets already reflects all publicly available information. 
B)  arbitrage is impossible in financial markets. 
C)  in financial markets both buyers and sellers will be equally informed. 
D)  financial markets are,on average,more efficient than product markets.

Question 18

Which of the following statements is TRUE? I.The riskiest stocks tend to move in sync with the economy.
II.A relatively safe stock is one that does not vary much with the state of the economy.
III.Health care stocks are some of the riskiest stocks.

Accepted Answer

A)  III only 
B)  I and II only 
C)  II and III only 
D)  I only 
A)  III only 
B)  I and II only 
C)  II and III only 
D)  I only

Question 19

When inside information becomes public information,profit opportunities:

Accepted Answer

A)  grow. 
B)  evaporate. 
C)  remain the same. 
D)  change in an indeterminate direction. 
A)  grow. 
B)  evaporate. 
C)  remain the same. 
D)  change in an indeterminate direction.

Question 20

Suppose that someone has decided to follow a buy-and-hold strategy in technology stock purchases and buys these stocks 8 years before retirement.The stocks grow in value and this person's retirement wealth increases.Critically evaluate this investment decision.Was it smart? Could it have been improved?

Accepted Answer

The person should not have put all of hi

______ mutual fund managers can consistently beat the market average.

What most likely happened to the stock for Apple because of the iPhone and iPad? Explain using a demand and supply graph.

In a given year,the S&P 500 Index fund outperforms about ______ of all active funds.

Stock market bubbles have real effects in the economy because:

Mutual funds can let you invest in hundreds of stocks with just one purchase.

One best reduces risk by buying stocks in geographic regions.

According to the rule of 70,if the interest rate on a bank deposit is 5% per year,how long will it take for the bank deposit to double in value?

The prices of traded assets,such as stocks and bonds,reflect all publicly available information.

Around the year 2000,there was a in _.

Which is NOT a major stock index?

If the efficient markets hypothesis holds,then only investors with inside information can earn a return higher than the stock market average return.

The risk-return trade-off is an example of:

Which of the following are advantages of saving your money in a mutual fund? I.You have professional fund management. II.Mutual funds have always outperformed the S&P 500. III.People with smaller amounts of money can diversify risk.

Which of the following investment instruments would a risk-averse individual choose?

Mutual funds with high fees:

Popular U.S.stock indexes include: I.FDIC II.Dow Jones Industrial Average III.NASDAQ

The efficient markets hypothesis states that:

Which of the following statements is TRUE? I.The riskiest stocks tend to move in sync with the economy. II.A relatively safe stock is one that does not vary much with the state of the economy. III.Health care stocks are some of the riskiest stocks.

When inside information becomes public information,profit opportunities:

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 10: Stock Markets and Personal Finance

______ mutual fund managers can consistently beat the market average.

What most likely happened to the stock for Apple because of the iPhone and iPad? Explain using a demand and supply graph.

In a given year,the S&P 500 Index fund outperforms about ______ of all active funds.

Stock market bubbles have real effects in the economy because:

Mutual funds can let you invest in hundreds of stocks with just one purchase.

One best reduces risk by buying ______ stocks in ______ geographic regions.

According to the rule of 70,if the interest rate on a bank deposit is 5% per year,how long will it take for the bank deposit to double in value?

The prices of traded assets,such as stocks and bonds,reflect all publicly available information.

Around the year 2000,there was a ______ in _______.

Which is NOT a major stock index?

If the efficient markets hypothesis holds,then only investors with inside information can earn a return higher than the stock market average return.

The risk-return trade-off is an example of:

Which of the following are advantages of saving your money in a mutual fund? I.You have professional fund management. II.Mutual funds have always outperformed the S&P 500. III.People with smaller amounts of money can diversify risk.

Which of the following investment instruments would a risk-averse individual choose?

Mutual funds with high fees:

Popular U.S.stock indexes include: I.FDIC II.Dow Jones Industrial Average III.NASDAQ

The efficient markets hypothesis states that:

Which of the following statements is TRUE? I.The riskiest stocks tend to move in sync with the economy. II.A relatively safe stock is one that does not vary much with the state of the economy. III.Health care stocks are some of the riskiest stocks.

When inside information becomes public information,profit opportunities:

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

One best reduces risk by buying stocks in geographic regions.

Around the year 2000,there was a in _.