Finance Saving & Investing

20 Questions | Total Attempts: 71

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Finance Saving & Investing

Questions and Answers
  • 1. 
    A stock split occurs when the shares of stock owned by existing stockholders are divided into a larger number of shares.
    • A. 

      True

    • B. 

      False

  • 2. 
    Conservative investors are attracted to small-cap stocks.
    • A. 

      True

    • B. 

      False

  • 3. 
    A bear market occurs when investors are pessimistic about the economy.
    • A. 

      True

    • B. 

      False

  • 4. 
    Large-cap funds include stocks of companies with assets of at least $500 million.
    • A. 

      True

    • B. 

      False

  • 5. 
    To pay for a new school, a local government may issue a ______________.
    • A. 

      Stock

    • B. 

      Mutual fund

    • C. 

      Municipal bond

    • D. 

      Penny stock

  • 6. 
    Government bonds have a high risk default.
    • A. 

      True

    • B. 

      False

  • 7. 
    Preferred stock offers investors all the following advantages EXCEPT ___________.
    • A. 

      Dividends before common stockholders receive any

    • B. 

      A higher yield than common stock

    • C. 

      More potential growth than common stock

  • 8. 
    Diversification is a key reason for buying a ______________.
    • A. 

      Corporate bond

    • B. 

      Municipal bond

    • C. 

      Treasury note

    • D. 

      Mutual fund

  • 9. 
    A company that issues stock to a small group of people is a _______________.
    • A. 

      Public corporation

    • B. 

      Private corporation

    • C. 

      Sole proprietorship

    • D. 

      Partnership

  • 10. 
    A company that sells its shares openly in stock markets, where anyone can buy them, is a ________.
    • A. 

      Public corporation

    • B. 

      Securities exchange

    • C. 

      Sole proprietorship

    • D. 

      Private corporation

  • 11. 
    One advantage of preferred stock is ______________.
    • A. 

      Less risk than common stock

    • B. 

      Higher yield than corporate bonds

    • C. 

      Greater growth potential than common stock

  • 12. 
    The _____________ is the dollar amount that the bondholder will receive at the bond's maturity.
    • A. 

      Face value

    • B. 

      Yield

    • C. 

      Premium

    • D. 

      Debt

  • 13. 
    Payments that result from the sale of securities in a fund's portfolio are called ______________.
    • A. 

      Income dividends

    • B. 

      Net asset values

    • C. 

      Capital gains

    • D. 

      Shares

  • 14. 
    Which of the following should be performed as part of a financial check up  ___________.
    • A. 

      Balance your budget

    • B. 

      Have insurance

    • C. 

      Start an emergency fund

    • D. 

      All answers are correct

  • 15. 
    Which of the following are the 5 components of risk?
    • A. 

      Inflation risk, interest rate risk, business failure, financial market, global investment

    • B. 

      Inflation risk, interest rate risk, liquidity, real estate

    • C. 

      Global investment, liquidity, real estate, bonds

    • D. 

      Inflation risk, interest rate risk, business failure, bear market

  • 16. 
    Income stocks ____________.
    • A. 

      Pay high dividends

    • B. 

      Are more stable companies

    • C. 

      Are associated some company growth

    • D. 

      All answers are correct

  • 17. 
    Small-cap stocks ________________.
    • A. 

      Lower investment risk

    • B. 

      Are from large corporations

    • C. 

      Are from smaller, less established companies

    • D. 

      Are from companies with capitalization of $500 million or more

  • 18. 
    The market condition that occurs when investors are pessimistic about the economy and sell stock is called a __________.
    • A. 

      Bull market

    • B. 

      Bear market

    • C. 

      Total return

    • D. 

      Security

  • 19. 
    The market condition that occurs when investors are optimistic about the economy and buy stock is called a __________.
    • A. 

      Bear market

    • B. 

      Bull market

    • C. 

      Economic decline

    • D. 

      Efficient market

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