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

To raise money for expansion or to grow the company.

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

All of the following correctly describe mutual funds EXCEPT that they

are guaranteed to increase in value

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

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

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

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INVESTMENTS W!SE Financial Literacy Practice Test

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Questions 15

Answers

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

INVESTMENTS W!SE Financial Literacy Practice Test Flashcards | StudBud