Review Quiz Principals of Business

A type of investment that invests in a lot of different companies is called

• Stocks

• Bonds

• Mutual funds

• T-bills

What is a stock?

• A loan an investor makes to a company or government that pays interest over time.

• A share of ownership in a company

• A collection of investments sold as a package.

• An option to purchase something in the future at todays price.

What is the primary reason for a company to issue stock?

• The stocks help investors earn a higher rate of return

• To raise money to grow the company

• To distribute the risk of bankruptcy across more investors

• To increase greater awareness of the company

This is where your orders to buy or sell stock are sent and carried out

• Stock Exchange

• Brokerage Firm

• Stock Meeting Place

• Money Exchange

All of the following are ways to earn money as a stockholder EXCEPT:

• getting dividends

• selling the stock at a higher value

• stock splits

• selling the stock at a lower value

Spreading your investments around to inrease financial security

• Risk assessment

• Diversification

• Stocks, bonds & cash

• Liquidity trap

Professionally managed, diversified investment that pools resources of many investors

• Treasury bonds

• Stock index

• Mutual fund

• Saving account

Ownership in a publicly traded corporation

• CD-certificate of deposit

• Money Market

• Treasury bill

• Stock

If you bought a stock at $20 a share and now it's worth $40 a share how much do you make per share if you sell all your stock now?

• $10

• $40

• $20

• -$20

A key difference between saving and investing is

• Saving is for everyone, investing is for the wealthy

• Your money is insured when investing, it is not in savings

• Investing has a guaranteed return, savings does not

• Saving is for emergencies & goals, investing is for long-term wealth