A company may choose to perform a stock split for which of the following reasons?

The price gets too high or too low to be attractive to potential investors

The company is needing to make an initial public offering (IPO)

The company needs to reduce the number of investors

This price is needing to be lower in order to increase market capitalization

Which of the following is a true statement concerning capital gains?

Long term gains are taxed at a lower rate than short term gains

Long term gains are investments that have been held for more than 5 years before selling

Short term gains have a lower tax than long term gains

Gains can only be calculated if an investment is held for one year or longer

If a company has a high PE Ratio, it could mean that

The price of the companies stock is currently overvalued

The price of the companies stock is currently undervalued

The price of the companies stock is expected to rise sharply

The price of the companies stock is expected to fall sharply

If an investor purchased a bond from a company, he/she is

Borrowing money from the company

Purchasing a high risk investment

Purchasing partial ownership in the company

How does a discounted bond work?

Issued at less than par value (face value), if held to maturity investor receives full face value

A bond that the issuing company/government has defaulted on and can only pay a percentage of the face value

Issued at a higher than par value (face value), if held to maturity investor doubles the face value

The most liquid type of bond an investor can purchase

Which of the following statements is true about a treasury bond?

Considered a safe investment because its issued by the government

Can be bought in $50 increments

Interest is variable and payable at the end of the maturity

One reason a company may issue a bond is to

Provide investors with company ownership

This organization helps to ensure that laws and rules governing investments are followed. They protect investors from unfair investment practices.

Securities and Exchange Commission

Consumer Finance Administration

The purchase of securities should generally be avoided when a consumer

Has retired and has limited income

Has discretionary income to purchase securities

The idea “Don’t put all your eggs in one basket” refers to what financial planning strategy?

Reducing risk through diversification

It takes time for investments to be fruitful

Research a stock before using all your funds to purchase it

Using saving products instead of investment products

Joe, a recent college graduate chooses to take a risk on the purchase of a new company’s stock. He feels that he can take this type of risk at this stage in his life because

He has time to recover from a financial lose

He has his retirement to think about

His discretionary income would be limited

This is not the time for risk taking

Investing Review

Authored by Jennifer Wray

Life Skills

10th - 12th Grade

Used 225+ times

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35 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The purpose of investing is to build wealth and meeting financial goals. This is accomplished through

Avoiding risk

Purchasing safe and liquid products

Regular investing and time

Short term holdings

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A reason that an individual may choose to use online investment services instead of a broker is that

Online services are easy to understand for a beginner

Online services offer a wider range of services such as estate planning and tax preparation

Online services provide extensive research and personalized assistance

Online services usually offer lower commission rates

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Stock or shares that represent ownership in a company is known as a(an)

Bond

Equity

Market

Mutual Fund

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

This is a contract for buying and selling an asset such as commodities at a future price at a future date. This contract is both a right and an obligation for the buyer.

Exchange Traded Product

Fixed-Income Security

Futures

Options

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

This is a contract giving the buyer the right to buy in the future at a fixed price. This contract is a right but not an obligation.

Exchange Traded Product

Fixed-Income Security

Futures

Options

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the largest physical equities market in the world?

Dow Jones

NASDAQ

New York Stock Exchange

S&P 500

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the largest US electronic stock market?

Dow Jones

NASDAQ

New York Stock Exchange

S&P 500

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Investing Review

The purpose of investing is to build wealth and meeting financial goals. This is accomplished through

A reason that an individual may choose to use online investment services instead of a broker is that

Stock or shares that represent ownership in a company is known as a(an)

This is a contract for buying and selling an asset such as commodities at a future price at a future date. This contract is both a right and an obligation for the buyer.

This is a contract giving the buyer the right to buy in the future at a fixed price. This contract is a right but not an obligation.

What is the largest physical equities market in the world?

What is the largest US electronic stock market?

This index is regarded as the single most predictive gauge of the large cap US equities market.

This index consists of some of the largest publicly traded equities on the New York Stock Exchange and focuses blue chip companies as a predictor of market performance

This type of market is characterized by a rise in stock prices and demonstrates an optimistic view on the performance of the market. Investors feel more comfortable buying and taking risks.

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