Introduction to Investing Test

What is"Net Change"?

• The total price of a stock, in cents

• The total amount a stock's price has changed since the market opened

• The total amount a stock's price has changed since the previous trading day

• The change in a stock's value over the last year

What is the most common face value for a bond?

• 1,000

• 10,000

• 100

• 100,000

What is a danger of over-diversification?

• Your portfolio has more risk than if you were less diversified.

• If your investments are spread thin, it is hard to beat the market

• It is impossible to keep track of more than 10 stocks

• None of these are serious dangers

What is an IPO?

• When a company first sells shares of stock to the public?

• When the government creates shares on a Stock Exchange

• A new apple product

• When a company gets angry at its shareholders and has a meeting

What is Capital Preservation?

• It is what you use to stop orders

• When companies buy back stock

• To make sure you keep the gains you make investing

• To make sure you don't lose you initial investment

Which of these is the difference between ETFs and Mutual Funds?

• ETFs usually have lower fees than mutual funds

• ETFs will never pay out the dividends of underlying stocks, but mutual funds will

• ETFs hold a wide basket of stocks instead of just a few

• ETFs are much older than mutual funds

Why did investors start using ticker symbols?

• To confuse "casual" investors and keep trading to professionals

• Investors liked to use "Text Speak" to communicate in code

• It was faster to move news using telegraphs with short names

• It makes it faster to look up multiple companies at a time on a computer

What does a Stock represent?

• A loan you make to a company that must pay back

• A contract for a company's goods or services

• Stocks are just tools used by investors to make money

• A percentage of ownership of a company including assets and profits

Which is one major advantage of Mutual Funds?

• You can pick the companies you invest in

• You have a fund manager so you do not need to constantly monitor your investments

• They have very low fees

• You get more dividends than if you held the underlying stock

What does it mean to "Diversify" your porfoilio?

• To hold more than 1 stock

• For your stocks to not be all in the same area of the economy

• To have a mix between stocks, mutual funds, or other securities

• A and B