Investments

Which of the following is NOT an investment?

• Stocks

• Bonds

• Mutual Funds

• Wages

What type(s) of returns can you get from purchasing stocks?

• Capital gains and dividends

• Capital gains and interest

• Interest and dividends

• Capital gains only

What type(s) of returns can you get from bonds?

• Interest and capital gains

• Interest and dividends

• Capital gains and dividends

• Interest only

What happens to the price of bonds if the interest rate in the market increases due to inflation?

• The price of the bond drops

• The interest paid by the bond drops

• The price of the bond rises

• The interest paid by the bond rises

What happens to the price of a bond if the market interest rate drops below the coupon rate on the bond?

• The price of the bond rises

• The interest paid by the bond rises

• The price of the bond drops

• The interest paid by the bond drops

Rather than buying many stocks to try to match the return of the entire market, an investor can instead

• buy shares in a mutual fund

• buy shares of just three stocks

• buy bonds and stock

• buy only bonds

How often is interest on a bond usually paid to investors?

• only at maturity

• once each year

• twice each year

• monthly

If an investor buys a municipal bond (one issued by a state, city, or political subdivision), the interest is

• not subject to federal income taxes

• only paid annually

• is the only possible return

• zero percent

What cost is involved with buying stock, other than the price per share?

• the holding tax charged by the government

• the stockbroker's commission

• the interest rate

• the dividend amount

If an investor holds an investment for longer than one year, any gains or losses on the investment are considered __________ for tax purposes, and are taxed at a lower rate.

• short-term gains or losses

• interest only

• the same as wages

• long-term gains or losses