Savings and Investment Strategies

A sector fund is a type of mutual fund that

• specializes in stocks that pay regular dividends

• invests in both stocks and bonds

• specializes in stocks of companies that are all of the same industry

• invests in stock of companies from around the world

If a business is profitable, it may pay out part of the profits in cash to the stockholders. These payments are _________.

• dividends

• capital gains

• interest

• both dividends and capital gains

Which of the following is the most liquid?

• real estate

• baseball card collection

• savings account

• stock investment

An advantage of renting your residence instead of owning it is

• you are freed from much of the work and expense of property maintenance

• the cost of rent is tax deductible

• it is easier to move when needed

• you are freed from much of the work and expense of property maintenance and it is easier to move when needed

When corporate profits to be distributed are large, common stockholders may receive more per share than preferred stockholders

• true

• false

All of the following are costs of home ownership except

• upkeep

• property insurance

• appreciation

• real estate taxes

The more frequently interest is compounded, the greater the growth in your savings.

• true

• false

A company is paying a quarterly dividend of $0.25 per share of its stock. The stock is currently selling for $20 a share. What is the current dividend yield on this stock?

• 1.25%

• 8%

• 2.25%

• 5%

For investments, generally the higher the potential yield, the greater the risk of loss

• true

• false

Which of these investments is the most risky?

• growth stocks

• municipal bonds

• commodities

• U.S. Treasury securities