Finance

Question 1

In a bankruptcy, creditors have a claim on the firm's assets before stockholders. Therefore,

Accepted Answer

bondholders would get paid back before stockholders.

Question 2

Bonds are less risky than stock. But they can have risk, let's see how it works..

Accepted Answer

Let's see that again., I'm ready to answer questions about bond risk.

Question 3

Stocks are riskier than bonds.

Accepted Answer

True

Question 4

When people buy or sell their stock,

Accepted Answer

this trading happens in the secondary market.

Question 5

When a company sells stock to raise money, this ownership in the company is referred to as

Accepted Answer

equity

Question 6

Mutual funds

Accepted Answer

are professionally managed., provide for diversification

Question 7

Understanding the financial system is important if

Accepted Answer

You want to own a house., You decide to open your own business., You don't want to work for the rest of your life., You want to make good financial decisions.

Question 8

Which market is larger?

Accepted Answer

Secondary

Question 9

Leverage increases the rate of return on invested funds.

Accepted Answer

True

Question 10

Which is the safest type of bond?

Accepted Answer

Government Bonds (US Treasury)

Question 11

Because they last longer than a year, stocks and bonds are both considered long-term.

Accepted Answer

True

Question 12

When a company sells stock to the public to raise money,

Accepted Answer

this happens in the primary market.

Question 13

The chart of Apple Inc.'s stock price illustrates the ___ of stock.

Accepted Answer

volatility

Question 14

You can't sell a mutual fund during the day like you can a stock.

Accepted Answer

True

Question 15

The coupon rate on a bond changes with interest rates.

Accepted Answer

False

Question 16

Bondholders receive

Accepted Answer

interest payments each year

Question 17

Diversification

Accepted Answer

lowers risk.

Question 18

Bonds are less risky because you can't lose money with them.

Accepted Answer

False

Question 19

Mutual funds are a very popular investment option. Let's see how they work...

Accepted Answer

Ready for questions., Let's see that again...

Question 20

A certificate of deposit is a time deposit at a ___ and it ___ covered by FDIC insurance.

Accepted Answer

bank; is

Question 21

Bonds are

Accepted Answer

debt

Question 22

Investors will purchase commercial paper from any company.

Accepted Answer

False

Question 23

Mutual funds don't offer much variety in terms of investment options.

Accepted Answer

False

Question 24

An index lets us know how the stock market is performing. Which gives us a broader look?

Accepted Answer

S&P 500

Question 25

Investors like commercial paper because it pays better interest than a bank.

Accepted Answer

True

Question 26

Government Bonds have lower coupons (interest) than Municipal or Corporate Bonds.

Accepted Answer

True

Question 27

Money Market funds differ from stocks and bonds in what way?

Accepted Answer

They are short-term and very safe.

Question 28

Commercial paper is attractive because it is cheaper than getting a loan from the bank.

Accepted Answer

True

Question 29

Stocks, bonds, and money market funds are categories of securities.

Accepted Answer

True

Question 30

Companies and Governments can raise money through the sale of bonds. Let's see how bonds work..

Accepted Answer

I might need to see that again., I'm ready to answer some questions about bonds.

Question 31

How much you invest in stocks stays the same over time.

Accepted Answer

False

Question 32

The coupon rate represents the

Accepted Answer

interest rate on the bond.

Question 33

Which is an example of the risk/return trade-off with bonds?

Accepted Answer

The higher the bond risk, the higher the coupon (interest).

Question 34

Let's learn about Commercial Paper.

Accepted Answer

Let's see that again...

Question 35

When interest rates rise, bond prices fall.

Accepted Answer

True

Question 36

Zipper Corporation is raising money to build a factory by ____

Accepted Answer

selling stock

Question 37

Money Market 'treasury funds' are called

Accepted Answer

treasury bills

Question 38

Bonds are

Accepted Answer

Long-term

Question 39

Asset allocation

Accepted Answer

provides for diversification.

Question 40

Standard and Poor and Moodys issue ratings to indicate the bond's

Accepted Answer

risk

Question 41

Stocks are an important part of an investment strategy because....

Accepted Answer

they offer a higher return.

Finance

Questions 41

Finance

Questions 41