5.04 Financial Planning 1

Regarding stock investments, which of the following primarily drives investors’ actions:

• Performance

• Expectations

• Recommendations

• Information

How does a bull market affect a stock’s price?

• By encouraging product purchases

• By discouraging product purchases

• By promoting well-performing funds

• By avoiding investment scams

How much a stock sells for depends directly on which of the following:

• How volatile the stock is

• The popularity of the company’s new product

• How high the company’s earnings are

• What buyers are willing to pay for the stock

What is the difference between a stock’s ask price and buy price?

• The ask price and buy price are usually equal.

• The ask price is usually higher than the buy price.

• The ask price is the sell price, while the buy price is the bid price.

• The buy price is the sell price, while the ask price is the bid price.

Stocks whose prices rise higher than, or fall lower than, the market as a whole are referred to as

• efficient.

• influential.

• volatile.

• successful.

Which of the following is a company-specific influence on a stock’s price:

• Investor action

• Government action

• Change in supply or demand

• Change in management

What happens when institutional investors purchase a number of stocks from the same company?

• Individuals purchase stocks from the company.

• Analysts recommend that investors sell their stocks from the company.

• The company introduces a new business model.

• The company introduces a new product.

Which of the following is not likely to cause a stock’s price to fluctuate:

• A well-known analyst’s recommendation to buy

• Addition to individual investor’s portfolio

• A fund manager’s sale of stock

• Removal from the S&P 500

In what way can the general state of the economy affect a stock’s price?

• By increasing supply or demand

• By making investment information available to the general public

• By bringing together a balanced portfolio

• By filtering out poor investments

Which of the following is a cyclical stock:

• Southwest Water Co. (SWWC)

• Triad Hospitals Inc. (TRI)

• US Concrete (RMIX)

• Colgate-Palmolive Co. (CL)