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Johnson Econ Topic 6: Money,Banking,Investing Flashcards | StudBud
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Johnson Econ Topic 6: Money,Banking,Investing
Johnson Econ Topic 6: Money,Banking,Investing
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1
Which of the following is the WISEST strategy for a new investor in the stock market?
Buy blue chip income stocks through a brokerage firm
Buy preferred stocks with a three-month call option
Follow the advice of a relative
Buy the hottest stocks and sell them ASAP for a quick profit
2
What advantages do financial intermediaries offer an investor?
Offer securities and interest-free loans
Share risks, provide information, and liquidity
Provide liquidity and assume risk
Liquidity and risk-free investment
3
In order to to vote at stockholder meetings and also earn dividends, you should invest in
preferred stock and income stock
common stock and income stock
common stock and growth stock
preferred stock and growth stock
4
Which of the following is a POSITIVE aspect of using a credit card?
It allows you to buy goods even if you don't have cash
Money is deducted from your bank account
Credit limits increase with use
Lower interest rates
5
What relationship does risk have to return?
Lower risk, higher possible return
Higher risk, lower possible return
Low risk, no return
Higher risk, higher possible return
6
What purpose does the FDIC serve?
To provide loans to risky borrowers
To insure customers' bank deposits
To restrict interest rates
To restrict the nation's money supply
7
Why do some people invest in hedge funds?
Potential huge profit
Diversification
Less risk
To only invest a small amount of money
8
Why does the United States government issue savings bonds?
To pay for government projects
To earn interest
To improve its bond rating
To raise taxes
9
What's the biggest risk when you invest?
You might have to pay higher capital gains taxes
You risk losing your principal investment
You offend companies by NOT investing in them
Your friends become envious of your success
10
In the early days of our nation, a strong centralized bank was favored by __________.
The Antifederalists
The Federalists
The entire nation
Thomas Jefferson
11
Which of the following is an example of commodity money put to use?
Giving a store clerk a five dollar bill for a $4 purchase
Writing an I.O.U. to a friend
A cow used to purchase land
Mowing a lawn for a friend who, in turn, gives you a haircut
12
Which of these is NOT one of the three uses of money?
A means to barter
A store of value
A unit of account
A medium of exchange
13
Which of the following is a tool that the Fed uses to regulate the money supply?
Reserve requirements
Check clearing policies
Bank examinations
Issuing of government checks
14
Which of the following is NOT considered an important characteristic of money?
limited supply
artistic design
portability
uniformity
15
When you evaluate an investment, you must balance
Risk, Liquidity & Return
Interest vs Prospectus
Diversification vs Risk and Return
Liquidity versus Risk
16
In the early 2000s, the number of home foreclosures increased because
borrowers could not repay their mortgages
a government bail out of financial institutions
people paid off their mortgages early
housing prices rose
17
The Federal Reserve System was created as a result of the need for financial stability shown by what event?
World War II
The Panic of 1907
The Great Depression
The collapse of the First Bank of the United States
18
The Federal Reserve System acts as lender of last resort to what group?
Businesses in general
Financial institutions
Federal government
Consumers
