Stocks and Securities
Over the past 70 years, the type of investment that has earned the most money, or the highest rate of return, for investors has been
Stocks
What type of security is stock issued by a corporation?
Equity securities
Funds are provided to the initial issuer of securities in the...(Multiple Choice)
secondary market
primary market
surplus market
deficit market
These are long-term debt obligations created to finance the purchase of real estate.
Mortgages
"Don’t put all your eggs in one basket summarizes what when investing?
Diversification
What does it mean to own stock in a company?
To own a portion of the company.
Do you own a portion of the company when purchasing a bond?
No, you are investing in the company.
True or False? If financial markets are efficient, this implies that all securities should earn the same return.
False
Debt obligations representing claims on a package of mortgages. (Multiple Choice)
1. Bonds
2. Mortgages
3. Mortgage-backed securities
4. Stocks
An emergency fund can help pay for which of the following unexpected expenses? (Multiple Choice)
1. Destroyed Phone
2. Car Problems
3. Medical Emergency
4. All of the Above
True or False: When security prices fully reflect all available information, the markets for these securities are said to be efficient.
True
The highest price the stock has traded over the past year is called
52-Week High
Financial markets facilitating the flow of short-term debt securities with maturities of less than one year are known as...
Secondary Markets
Securities laws protect investors by requiring companies to
Provide investors with specific information about the company
In which situation are you taking the least amount of risk?
Buying a CD
True or False: Liquidity is the degree to which securities can easily be sold without a loss of value.
True
The current price of one share of stock is called...
Last
Financial market participants who receive more money than they spend, such as investors are called
surplus units.
The Securities Act of 1933 (Multiple Choice)
1. required complete disclosure of relevant financial information for publicly offered securities in the primary market.
2. declared trading strategies to manipulate the prices of public secondary securities illegal.
3. imposed heavy penalties for insider trading.
4. required complete disclosure of relevant financial information for securities traded in the secondary market.
5. all of the choices are correct.
Please describe behavioral finance
applies psychology to financial decision making.
If you buy the stock of a new company you are at risk of...
Losing all the money you invested.
The DOW Jones Industrial Average is an index of 30 American companies. Why is the DOW Jones Industrial Average important?
It provides a snapshot of how the stock market and the US economy is doing.
What type of financial market facilitates the flow of short-term funds
money markets.
The Securities and Exchange Commission (SEC) was established by the...
Securities Exchange Act of 1934.
All investments have risk and you should never invest more money than you can afford to lose. Can you ever lose more money than you invested?
Yes