1
True or False: Interest earned on a US Series EE Savings Bond is exempt from local and state taxes.
True
A weed killer is found to cause cancer in mice. As a result, stock holders are likely to . . .
Sell shares, causing the price to decline.
When Lucy was born, her grandparents gave her a Series EE savings bond that will be worth $1000 at maturity. Her grandparents paid:
(a) 100
(b) 500
(c) 1000
(b) 500
"Diversification" means . . .
Having a variety of different investments that allows you to spread the risk of your investments across a number of different investment vehicles.
True or False: Past performance of an investment is a good indicator of future results.
FALSE
Treasury Bills (t-bills) are . . (a) a secure, low risk investment, or (b) an investment that offers higher yield than corporate bonds.
A - a secure, low risk investment
If a business wants to raise capital without going into debt it can:
(a) borrow money from a bank
(b) Issue stock
(C) Issue a bond offering
(b) Issue stock
Which of the following effects stock price?
(A) wages
(B) corporate profits
(C) age of the corporation
(b) Profits
Which of the following is the riskiest investment?
Savings account
Common stocks
Bonds
Regular checking account
2. Common stocks
An investor bought 40 shares of ABC corporation's stock at $80 a share. Two weeks later, the investor receives notice that the corporation has approved a 2-for-1 stock split. Based on this information, the investor would own at the moment of the split . .
80 shares at $40 each
If you reinvest a dividend, you . . .
purchase more of the same stock.
What is the largest equities market in the world?
(a) American Stock Exchange
(b) NASDAQ
(c) New York Stock Exchange
(c) New York Stock Exchange
What financial product can you buy for $25, is safe, and will be worth $50 in the future?
Series EE savings bonds
An investor buys 1000 shares of common stock at $50 a share on 50% margin. This means he owes the brokerage firm that sells him the stock . . .
$25,000, because he borrowed to buy half the stock.
Before a company can issue a stock or bond, it must register the vehicle with the. . .
SEC
The American Stock Exchange is where you buy:
(a) interest
(b) stock advisors
(c) Securities
(d) mutual funds
(c) Securities
Mutual funds . . .
(a) are an investment portfolio managed by an investor
(b) Guaranteed to increase in value
(c) hold a wide range of different investments, providing diversification
(c) hold a wide range of different investments, providing diversification
What federal agency regulates the securities industry?
The Securities and Exchange Commission (SEC)
When the market has a steady decline in stock prices, we call that a . . .
Bear Market
If you buy a stock, you now :
(a) own a part of the company
(b) owe the company money
(c) have lent the company money
(A) own a part of the company
Who makes money when securities are traded on the secondary market?
(a) the SEC
(b) The corporation issuing the stock
(c) investors
(c) Investors
What is the main advantage that index funds have when compared to actively managed funds?
a) Index funds are generally less risky in the short term.
b) Index funds generally have lower fees and expenses.
c) Index funds are generally less likely to decline in value.
b) Index funds have lower fees and expenses
IF you buy stock for $4,000, and then sell it a year later for $1000, the sale resulted in . . .
(a) Price earning
(b) Capital loss
(c) Yield
(b) Capital Loss
When the market has a steady increase in stock prices we call that a . . .
Bull Market
True or False: Investments with higher risk tend to provide higher returns over time than lower risk investments.
True -- the greater the risk, the greater the possible reward - and the possible loss in the short term.