W!SE Review #2 Investing

A company issues bonds to the public to ______________.

• lend them money

• borrow money

• decrease its share price

• increase the number of shareholders

Which example below reflects who typically issues bonds and for what purpose?

• The government issues bonds to fund public projects and infrastructure

• Individuals issue bonds to raise personal investment funds.

• Banks issue bonds to increase their reserves

• Corporations issue bonds to reduce their debt.

A bond is an example of a _____________.

• loan

• line of credit

• currency

• certificate of deposit

What is investing?

• Putting your money under your mattress

• Spending all your money on toys

• Letting your money grow over time by buying things that could increase in value

• Giving all your money to a friend

Which statement best defines a mutual fund?

• A type of individual retirement account.

• A government-issued bond.

• An investment portfolio that pools money from multiple investors to invest in stocks, bonds, and other assets.

• A loan provided by a bank for purchasing a home.

What is it called when a person buys a stock and sells it for more than the purchase price?

• Stock trading.

• Stock flipping.

• Capital investment.

• Capital gain.

Which statement best describes a bull market?

• A period of declining stock prices and pessimism in the market

• A period of increasing stock prices and optimism in the market.

• A period of stable stock prices and low trading volume.

• A period of high inflation and economic recession.

Which agency oversees the stock market?

• Federal Reserve System (FED)

• Securities and Exchange Commission (SEC)

• Federal Trade Commission (FTC)

• Internal Revenue Service (IRS)

What might cause the price of a stock to change on a particular day?

• The corporation’s finance committee changes the stock price quarterly

• The company announces the release of a new product.

• The president of the company declares an increase or decrease in the price of the stock.

• Prices are fixed when the stock is issued for sale to the public and are not likely to change

How do mutual funds typically manage risk?

• By investing only in high-risk assets.

• By concentrating investments in a single asset class.

• By spreading investments across a diverse portfolio of assets.

• By avoiding investments altogether.