Vocabulary
Multiple Choice
True/False
Multiple Choice
Vocabulary
100
The chance that an investment will decrease in value is called: a) loss b) risk c) gain d) return
b) risk
100
Which of the following is a loan to the federal government with a promise to pay you interest? a) corporate bond b) savings bond c) common stock d) preferred stock
b) savings bond
100
True or False: High-risk investments have the potential for a higher rate of return than low-risk investments.
True.
100
The ______________ is a location where orders to buy and sell stock are carried out. a) Federal Trade Commission b) Bank c) Stock Exchange d) Mutual Fund
c) Stock Exchange
100
A unit of ownership in a corporation is a: a) dividend b) share of stock c) bond d) certificate of deposit
b) share of stock
200
A voting share that does not pay a set dividend is called: a) preferred stock b) common stock c) stock exchange d) none of the above
b) common stock
200
Which of the following investments is considered to be the most liquid? a) Certificate of deposit b) Savings account c) Land d) Bonds
b) Savings account
200
True or False: If a corporation makes a profit and pays part of the profit to its owners, the payment is called interest.
False: If a corporation makes a profit and pays part of the profit to its owners, the payment is called a dividend.
200
A company that specializes in helping people buy and sell stocks and bonds is: a) a brokerage firm b) bond share c) money manager d) credit union
a) a brokerage firm
200
The savings institution that is nonprofit, owned by its members, and limited to people with some common bond is a: a) Credit union b) Commercial bank c) Savings and loan association d) Mutual savings bank
a) Credit union
300
A non-voting share that pays a set dividend is called: a) preferred stock b) common stock c) stock exchange d) none of the above
a) preferred stock
300
The market price of a share of stock is determined by: a) The demand for the stock b) The corporation issuing the stock c) The directors of the stock exchange on which it is sold d) The federal government
a) The demand for the stock
300
True or False: The FTC (Federal Trade Commission) regulates the trading of stocks and bonds.
False: The SEC also oversees all of the stock exchanges and any organization connected with the selling of securities.
300
Preferred stock differs from common stock in that preferred stock generally: a) entitles the holder to voting rights per share b) provides for a specific dividend c) enables the holder to be eligible for election to the Board of Directors d) increases in price faster than common stock
b) provides for a specific dividend
300
The person who handles the transfer of stocks and bonds between buyer and seller is known as a: a) banker b) stockbroker c) government d) accountant
b) stockbroker
400
Stocks issued by large corporations with long, steady records of paying dividends are: a) Growth stocks b) Speculative stocks c) Blue chip stocks d) Deferred stocks
c) Blue chip stocks
400
Mutual funds are a very popular investment choice because they offer: a) a diversified portfolio for a lower cost b) a high risk, high reward gain potential c) expense free investment choices d) greater flexibility than managing your own portfolio
a) a diversified portfolio for a lower cost
400
True or False: Land is a good investment because it guarantees high earnings and has liquidity.
False: Land is not a good investment because it does not guarantee high earnings and does not have liquidity.
400
Which of the following is the main advantage of a mutual fund? a) Guaranteed Dividends b) A diversified portfolio at low cost c) Risk free investing d) Being in control of what stocks are in your fund
b) A diversified portfolio at low cost
400
Which of the following is considered a savings option in which money is left on deposit for a stated period of time to earn a specific rate of return: a) Savings Bond b) Money Market Account c) Certificate of Deposit d) Mutual Fund
c) Certificate of Deposit
500
A creditor of the company who issues the bond is called a: a) stockholder b) brokerage firm c) dividend d) bondholder
d) bondholder
500
Which of the following is the main function of the Securities Exchange Commission? a) to protect consumers from fraud b) enforce laws that concern the trading of stocks and bonds c) to enhance informed consumer choice d) to enhance public understanding of the competitive process
b) enforce laws that concern the trading of stocks and bonds
500
True or False: When profits are high, the board of directors will always declare dividends for the owners of common stock.
False: Owners of common stock are not guaranteed any dividends. Instead of paying out dividends to common stockholders, the board of directors might decide to reinvest the profits back into the business.
500
By using the "Rule of 72," it is possible to estimate that money earning an 8% interest will double in about: a) 9 years b) 12 years c) 14 years d) 18 years
a) 9 years
500
Which of the following is considered a savings option that typically pays more interest and usually requires a minimum balance but money can be withdrawn at any time: a) Savings Bonds b) Money Market Account c) Certificate of Deposit d) Mutual Fund
b) Money Market Account
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