Which statement about life cycle funds is NOT true?

invest more aggressively early, andmore conservatively later

Market capitalization is

the total dollar market value of all of a company’s stocks

When investing for growth:

buy for the market value growth sell later for capital gains

Which statement about mutual funds is NOT true?

pool investor’s money together into avariety of investments.

Which statement about investing is true?

Investing early can have a significant advantage

Why is diversification of investments a wise choice?

to make up losses in one area with gains from another

What is the relationship between risk and return?

the higher the risk, the higher the potential return

A stock split is most likely to occur when:

the price of stock becomes too high

When does a bond earn full interest?

at maturity date, which depends upon the type of bond

Volatility refers to:

sudden swings in the value of stocks

When does an investor experience capital loss?

selling stock at a lower price than it was purchased

An example of a blue chip stock is

a large, well-established US company

When is the best time to buy stocks?

during a bear market when prices are low

Why is it wise to invest money?

to have a way to grow money for thefuture/retirement

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Duplicate of Economics Investing Review

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Questions 25

Answers

1
A “bear” market is
a time of rising stock prices
a sluggish market
a growing market
a time of high inflation
2
Where are we now in the market cycle?
heading out of a bull market
heading into a bear market
stuck at the very bottom
riding a slow bull market
3
Ownership shares in a company are called:
return
stock
dividends
bonds
4
Which statement about life cycle funds is NOT true?
Life cycle funds are generally long-term investments.
invest more conservatively early, andmore aggressively later
invest more aggressively early, andmore conservatively later
Life cycle funds adjust over time.
5
Which of the following are higher risk investments ?
blue chip stocks
new stocks or new companies
growth stocks
government bonds
6
Market capitalization is
the total dollar market value of all of a company’s stocks
the highest price paid for a share
the 52-week range for a company’s stock
the number of shares a company has
7
When investing for growth:
dividends are collected as income
buy for the market value growth sell later for capital gains
money is made quarterly while the stock is owned
stocks are bought and sold quickly
8
An example of an investment with low liquidity
travelers checks
checking account
stock
cash savings
9
Which statement about mutual funds is NOT true?
Mutual funds diversify investments.
usually contain investments with different degrees of risk
Mutual funds guarantee a certain rate of return
pool investor’s money together into avariety of investments.
10
Which statement about investing is true?
Investing early can have a significant advantage
It is wise to take more risks as retirement nears.
Investing in stocks will guarantee a profit.
Bonds are generally a riskier investment than stocks.
11
Why is diversification of investments a wise choice?
to only invest in conservative, low-risk investments early
to make up losses in one area with gains from another
to be able to make as much money as possible in a short time
to be able to sell quickly when the market drops
12
What you earn on stock while you own it is called:
capital loss
liquidity
dividends
capital gains
13
The profit made when stock is sold:
shares
capital loss
capital gains
dividends
14
What is the relationship between risk and return?
the higher the risk, the lower the potential return
the lower the risk, the higher the potential return
the higher the risk, the higher the potential return
there is no relationship between risk and return
15
A stock split is most likely to occur when:
stockholders demand higher dividends
the price of stock becomes too high
the stock market is doing poorly
a company is losing money
16
When does a bond earn full interest?
20 years after purchase, regardless of the type of bond
at maturity date, which depends upon the type of bond
always 10 years after purchase
whenever it is sold
17
Loans investors make to corporations or government
bonds
stocks
dividends
liquidity
18
Volatility refers to:
the regular rise and fall of the 10 year market cycle
the amount of risk an investment may have
how easily an investment can be converted to cash
sudden swings in the value of stocks
19
An example of an investment with high liquidity
stock
bonds
real estate
savings account
20
What type of bonds have a higher risk?
government securities
corporate bonds
junk bonds
government bonds
21
When does an investor experience capital loss?
selling bonds before they fully mature
reinvesting dividends toward the purchase of more stock
selling stock at a lower price than it was purchased
by selling stock after it has split
22
An example of a blue chip stock is
a large, well-established US company
a foreign-owned company operating in the US
a high-risk company
a new start-up firm
23
When is the best time to buy stocks?
during a bear market when the prices are high
in the middle of the market cycle
during a bull market when prices are low
during a bear market when prices are low
24
Why is it wise to invest money?
to have a way to grow money for thefuture/retirement
it is all too risky, and is not wise to invest
you're guaranteed $ if you buy and sell stock quickly
you're guaranteed enough $ to retire on if you invest
25
NASDAQ, NYSE, and AMEX are:
mutual funds
stock exchanges
corporations
high risk stocks

Duplicate of Economics Investing Review Flashcards | StudBud