Investing test review

Conservative (those who avoid risk) investors are attracted to small-cap stocks.

• true

• false

A bear market is a market condition that occurs when investors are pessimistic about the economy and sell stocks.

• true

• false

Stock in companies that pay higher-than-average dividends are called income stock.

• true

• false

Dividends are always paid to shareholders of common stock.

• true

• false

Retained earnings are profits a company reinvests for expansion or research and development.

• true

• false

A marketplace where brokers meet to buy and sell stock is called_.

• a primary market

• a securities exchange

• a brokerage firm

• ebay

Company XYZ declares a 2:1 stock split effective June 1st. If Bob owned 75 share valued at $100 each on May 31st, how many shares will be own on June 1st, and what will be the value of each share.

• 75 shares/$100 each share

• 150 shares/$50 each share

• 75 shares/$50 each share

• 150 shares/$200 each share

Which of the following is an example of a speculative (or high risk) investment?

• municipal bonds

• money market accounts

• utility stocks

• precious metals, and collectibles.

The DOW Jones Industrial Average is

• an overall indicator of the overall condition of the stock market

• made up mostly of large-cap stocks

• a group of stocks from aerospace, financial, all household products, and telecommunications

• all of the above

Which risk component is most likely at fault when an investor's stock becomes worthless?

• inflation

• interest rates

• business failure

• financial markets