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2nd Hr Investment Unit Test Review Flashcards | StudBud
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2nd Hr Investment Unit Test Review
Market price is
High risk bonds tend to have lower interest rates
2nd Hr Investment Unit Test Review
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1
High risk bonds tend to have lower interest rates
False
True
2
Market price is
How much you earn & listed on your W-2 form
The current price that a buyer is willing to pay
The highest amount of return one can expect from a stock's performance
The most predictable part of investing
3
Which type of account is more susceptible to inflation risk?
Mutual fund
Savings account
4
Percentage (%) of NI that financial experts recommend you commit to saving & investing as part of your spending plan?
10%
20%
5
Mutual Funds
Combine funds of many different investors
Are not sold by broker dealers
May include stocks and bonds
Both A & B
6
If a company performs poorly or goes out of business, a stockholder could lost part of all of their principal investment
True
False
7
The goal of investing is to
Provide for future financial security by building net worth
Save for current consumption
Use monies for eating out, going to the movies
Have money at the end of the year to go on a trip
8
An advantage of choosing a discount brokerage firm is lower fees
True
False
9
Worldwide, there are many different stock exchanges
False
True
10
The 3 types of investor philosophies are Conservative, Moderate and
Interactive
Hyperactive
Measureable
Aggressive
11
An index fund
Is a large group of similar stocks and bonds
Requires very little management compared to other mutual funds
All of the above
Mutual fund designed to reduce fees by investing in the stocks & bonds
12
1 What is inflation?
The rise in the general level of prices
Projected value of an investment at the end of a specified period of time
Uncertainty the return on an investment will deviate from what is expected
The number of times something happens to money
13
Real Estate investments are not as time consuming as other investments
False
True
14
What is a vesting period?
The period of time you hold a stock before selling it
The period of time it takes a brokerage firm to complete a trade
Time it takes for shares in employer retirement plan 2 b owned by employee
The period of tiem you have been vesting for
15
What kinds of cognitive biases and behaviors can prevent people from making smart investing decisions?
Investing in a diversified portfolio instead of trying to time the market
Staying calm when the market is experiencing a downturn
Buying stocks when prices are low and selling them when they're high
Exiting the market because that's what everyone else is doing
16
What do brokerage firms do?
Both A and C
Pay your taxes
Charge fees
Act as an intermediary between the stock exchange and the investor
17
Which of the following statements about Exchange Traded Funds (ETFs) is TRUE?
ETF prices can change throughout the day as they are exchanged on the mkt.
An ETF is a single stock that you can buy in the stock market
ETFs are traded once a day after the market closes
Actively managed ETFs have very low fees.
18
2 The relationship between risk and return can be stated as:
Higher risk indicates lower return
Lower risk indicates higher return
No relationship exists between risk and return
Higher risk indicates higher return
19
Investments are a tool for building net worth
True
False
20
A financial Plan would not be complete without both savings and investements.
True
False
21
To open a brokerage account, you....
Set an appointment with a brokerage firm as you an only open it in person
Need to be over the age of 21 or you need a parent to open it for you
Need proof that you have saved enough for an emergency fund first
Must be able to transfer money from a checking or savings account
22
Savings and investments are both forms of unearned income and are therefore NOT subject to income tax
False
True
23
A person will likely have the same investment philosophy with a 5 year investment vs. a 30 year investment
False
True
24
Which has the potential to earn higher returns?
Savings
Investing
25
A Mutual Fund is suggested for investors who
Want to reduce investment risk
Hate to pay high fees for services
Need a quick return on their investment
Tend to have aggressive philosophies toward investing
26
A dividend is
A fee charged for rental of a property
Profit share from a company that is distributed to stockholders in cash
Returns from the sale of property
The highest amount of return you can earn from a stock purchase
27
The profit or income generated by saving and investing is known as:
Return
Risk
Debt
Inflation
28
With some investments, you may have to wait a long time to access funds.
True
False
29
Unlike savings tools, investments are
More of a risk
Not secure
May not be easily converted into cash
All of above
30
All investments carry some investment risk
True
False
31
Portfolio Diversification means
An investor is likely to lose money
An investor must sell immediately
An investor wants to reduce risk
An investor puts "all their eggs in one basket"
32
The opportunity for large returns on real estate investments is
high
low
33
Assets purchased with the goal of providing additional income from the asset itself but with the risk of loss?
Investments
Savings
34
All bonds have a maturity date
True
False
35
Investments are more liquid than savings tools.
True
False
36
When someone purchases stock in a company, typically they
Owe the government money
Have to pay a dividend back to the company
Have to sell the stock a pre-determined date
Own a small percentage of ownership in that company
