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Investing Review
Investing Review
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1
Which mutual fund investing style is depicted in the Morningstar style box?
Large companies with low expense ratios
Large companies with stocks at reduced share price
Large companies mix of stocks and bonds
Large companies with stocks for growth potential and reduced share price
2
Which investment type should you hold the LEAST in your portfolio closer to retirement for good asset allocation?
CDs
Bonds
Stocks
Mutual Funds
3
A big advantage of most retirement accounts is that investment dollars are __________, reducing taxable income.
tax free
taxed lower
taxed higher
tax-deferred
4
A 2:1 stock split would result in:
twice as many stocks at full price
twice as many stocks at 1/2 price
twice as many stocks same price
stock price reduced by half
5
Which strategy for minimizing risk involves investing a set amount each month to lower cost?
Timing the Market
Dollar Cost Averaging
Asset Allocation
Diversification
6
Tax-advantaged retirement fund allows you to invest money from paycheck before taxes & get employer matching?
403b
401k
IRA
Roth IRA
7
Time Value of Money says money today is worth more than tomorrow. Why?
inflation makes money more valuable in the future
inflation risk is higher today
opportunity to invest and exponential gains
risk reduces over time in the market
8
A small-cap ________________ mutual fund includes young companies with increased sales and revenue.
value
growth
index
blend
9
Which investment type is a loan to a company or government, like an IOU, and offers a fixed return?
Bonds
Stocks
CDs
Mutual Funds
10
Which investment type has historically returned 10% and is your best bet to accumulate wealth?
Mutual Funds
CDs
Stocks
Bonds
11
A stockbroker is someone who:
Works for a company to sell you shares of its stock
Oversees stock transactions to ensure ethical trades
Manages a stock mutual fund
Can buy and sell shares of stock
12
Which investment is best for income investing & capital preservation?
Small-cap growth mutual fund
Real estate
Individual stock
Bond mutual fund
13
What is the report called that is prepared to share with potential investors for mutual funds?
portfolio report
annual report
fund report
prospectus
14
What % of your pre-retirement income do you need in retirement?
50-60%
60-80%
70-80%
40-50%
15
The index of large companies & good measure of the stock market & many mutual funds compare to this index.
Nasdaq Composite
Dow Jones Industrial Average
Russell 2000
S&P500 Index
16
Which investment is best for growth investing & capital appreciation?
Stocks
Real estate
Bond mutual fund
U.S. Savings Bond
17
Which of the following is NOT a benefit of mutual fund investing?
Professional management - what & when to buy/sell
Share price determined once a day
Affordability - own many stocks for less$
Diversification - multiple stocks and sectors
18
Which financial goal below is a good example of when to SAVE rather than INVEST your money?
Buying a new car in 7 years
A down payment on a house 10 years from now
Money for a winter ski trip in 10 months
Money contributed to an IRA for retirement
19
Which risk strategy involves investing in multiple investments to reduce exposure; gains > losses
Asset Allocation
Diversification
Dollar Cost Averaging
Timing the Market
20
A share of profits paid to stockholders are called:
bonuses
capital gain
dividends
simple interest
21
When an investor sells shares of stock for a profit what does he or she call the return?
income investing
capital preservation
capital appreciation
capital gain
22
A 10-year bond, coupon of 8% and principal of $5,000 would yield how much in simple interest?
$9000
$4000
$400
$400,000
23
It's not timing in the market, it's ________ in the market.
Diversification
Stocks
Time
Money
24
What retirement fund allows you to put money away and never pay taxes on earnings?
401k
403b
Roth IRA
IRA
25
Which of the following would cause a stock price to fall?
New CEO is announced with successful track record
Company earnings exceeded projected expectations
Company earnings fell short of projected expectations
News of an innovative product released
26
Commonly recognized truth in investing is that:
past performance is what it is
past performance has no value in choosing investments
past performance does not guarantee future returns
past performance guarantees future returns
27
Which strategy for minimizing risk adjusts the % of investments in each investment type closer to goals?
Diversification
Dollar Cost Averaging
Timing the Market
Asset Allocation
28
The biggest advantages for younger investors in mutual funds is:
very low fees
affordable access to investing in the stock market
opportunity to hit a home run after stock splits
ability to choose your own stocks
29
Which of the following is NOT a benefit of mutual funds?
Immediate diversification - # of stocks & sectors
Fees involved in managing stocks
Professional management - choosing what & when to buy/sell
Affordability - own many stocks for less $
30
Not only should you invest early, what else should you do to increase your returns?
invest in large companies
regulary add to your investment
take highest risk for bigger return
invest in an individual stock
31
A bear market occurs when stock prices are falling.
True
False
32
2 Ways Investing is Different Than Saving
safe, low risk
Consistent returns
Long term goals
Higher risk, higher potential returns
33
Advantages of tax-deferred investing include which of the following? Two answers.
Greater returns as more money invested over time
Reduces taxable income so pay less income tax now
investments are taxed at lower rates
Never pay taxes on earnings
34
Ultimate advantage of investing in real estate.
Leverage, 20% down pmt + return on full price
More liquidity in that you have equity in the home
High price allows money to grow more
Real estate involves less risk since appreciation is given
35
The higher the risk, the higher the _____________ return.
potential
overall
guaranteed
average
36
Identify the mutual fund investing style for large companies whose share price is down currently.
large blend
large value
large risk
large growth
37
Why it is SO important to start investing early! Huge.
Have time to build a diversified stock portfolio
Exponential growth potential that can't be matched later
The best deals in the market are now!
Gain experience and confidence in the market
38
Return on investment if you sold stock shares for a capital gain of $500 on $1800 investment is ______ (round up)
22%
20%
28%
33%
