One way people can earn money from stocks is by:

Selling the stock for a higher price than they paid for it

The use of savings to earn a financial return

A loan from an investor to a corporation or government

When people buy stock on a stock market,

the person selling the stock receives money

Fee to pay for fund advertising

Why do companies issue stock?

They want to raise money for capital

Which of the following statements about mutual funds is true?

Spreads the risk among several different stocks

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Stocks, Bonds,and Mutual Funds

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Basic Investing questions

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Questions 20

Answers

1
The more risk you are willing to take, the more you stand to gain or lose.
True
False
2
You will always earn a positive return from an investment.
True
False
3
What is a stock?
Ownership in a company
Part of a company's profit
Above average return
Money received from a company
4
Risk is the uncertainty that you will receive the promised return.
False
True
5
A portfolio is a person’s collection of investments.
True
False
6
Liquidity is the ability to turn your investment into cash quickly.
False
True
7
Why do people buy stock?
They expect to earn a return
Because there is no chance of loss
They expect interest payments
The government makes them
8
One way people can earn money from stocks is by:
Selling the stock for the same price
Buying stocks from an investment banker
Selling the stock for a lower price than they paid for it
Selling the stock for a higher price than they paid for it
9
Bonds are debt obligations of corporations or governments.
True
False
10
Investing is the spreading of risk among many types of investments.
True
False
11
An investment is:
The use of savings to earn a financial return
A summary of a corporation’s financial results
Borrowing money to invest in a risky stock
The uncertainty that you will receive a return
12
A bull market means that the stock market is doing well.
False
True
13
What is a bond?
A loan from an investor to a corporation or government
A group of stocks sold together for a set price
A certificate of deposit
Ownership with the right to a percentage of earnings
14
What is a stock dividend?
A capital gain
The price paid for a stock
Part of a company's profit
a number you can divide by
15
When people buy stock on a stock market,
the person selling the stock receives money
The corporation promises to pay them a return
The person buying the stock receives money
The corporation loses money
16
Bonds are usually considered low risk, low return investments.
True
False
17
A 12b-1 fee is a:
Sales commission
Management fee
Fee to pay for the funds brokerage commission
Fee to pay for fund advertising
18
Why do companies issue stock?
They want to raise money for capital
Because it makes them feel important
They like having shareholders
It increases their portfolio
19
Which of the following statements about mutual funds is true?
A 12b-1 fee is an acceptable fee for a mutual fund
All mutual funds are the same
Many mutual funds do not charge management fees.
Spreads the risk among several different stocks
20
Stock is a unit of ownership in a company.
True
False

Stocks, Bonds,and Mutual Funds Flashcards | StudBud