A stock paying a high quarterly dividend would be most attractive to which of the following types of investors?

Retirees living on a fixed income

Which of the following represents the broadest indicator of stock market performance?

The Standard & Poor’s (S&P) 500 Index

On stock market tables, Square Co is listed as SC & Drexel Corp is listed as DRE; SC for Square & DRE for Drexel are the

companies’ official stock symbols

Which of the following correctly describes the role of the professional working in a financial institution?

Broker: buys and sells stocks, bonds, and mutual funds

All of the following correctly describe mutual funds EXCEPT that they

are guaranteed to increase in value

What is a common feature of both a bond and a common stock?

The investor has the right to sell the investment at any time

Why do private corporations issue shares of stock to the public?

To raise money for expansion or to grow the company.

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INVESTMENTS W!SE Financial Literacy Practice Test

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Questions 15

Answers

1
A stock paying a high quarterly dividend would be most attractive to which of the following types of investors?
Retirees living on a fixed income
College students in their senior year
Young married couples with one child
Speculators interested in risk
2
The daily activities of the New York Stock Exchange (NYSE) are similar to a
marketplace
restaurant
bank
library
3
A person bought stock for $4,000 and one year later they sold it for $5,000. The sale resulted in a
capital gain for the investor
change in corporate stock yield
Net profit for the company
capital gain for the company
4
Which of the following represents the broadest indicator of stock market performance?
The Dow Jones Industrial Average (Dow).
The Russell 2000 Index
The NASDAQ
The Standard & Poor’s (S&P) 500 Index
5
When there is a steady increase in stock prices over a period of time, it's called
Bear market
Pessimist’s market
Bull market
Optimist’s market
6
Historically, all of the following strategies have helped people to grow their money EXCEPT
using dollar-cost averaging over time
buying stocks and holding them for a long period of time
being a day trader
buying stocks with dividends that are reinvested in the company
7
On stock market tables, Square Co is listed as SC & Drexel Corp is listed as DRE; SC for Square & DRE for Drexel are the
companies’ official stock symbols
United States Treasury Department’s identifiers
Internal Revenue Service’s (IRS) codes
Securities and Exchange commission’s (SEC) trading codes
8
An example of an investment product is a
checking account
credit union savings account
computer
bond
9
Which of the following correctly describes the role of the professional working in a financial institution?
Certified Financial Planner: provides mortgage loans to homeowners.
Broker: buys and sells stocks, bonds, and mutual funds
Broker: advises people on taxes and credit card debt.
Certified Financial Planner: buys and sells real estate.
10
All of the following correctly describe mutual funds EXCEPT that they
are guaranteed to increase in value
generally hold a wide range of different investment products
are usually less risky than investing in one stock
contain an investment portfolio managed by a professional
11
An oil company's spill destroys the environment for years & costs billions to cleanup. Their stock will probably
increase
double in value every three months
decrease
remain unchanged
12
What is a common feature of both a bond and a common stock?
The investor has the right to sell the investment at any time
Capital gains are tax free for both investments
Both investments can be purchased at a discount
Both investments pay interest annually
13
A person will generally AVOID buying investment products if they
need the money to be liquid
are interested in building wealth
have a stock portfolio
want to make money quickly
14
People who are retired and living on limited fixed incomes should
keep money in on investment
make risky investments
keep money in savings at a bank
reduce their exposure to risk
15
Why do private corporations issue shares of stock to the public?
To be included in the Dow Jones Industrial Average (Dow).
To raise money for expansion or to grow the company.
To maintain control over company decisions.
To provide employees with an investment opportunity.

INVESTMENTS W!SE Financial Literacy Practice Test Flashcards | StudBud