Investments Section 2 Review

What is the term used to describe the interest rate associated with bonds?

• Dividend rate

• Coupon rate

• Exchange rate

• Capital rate

If a mutual fund is constructed to match or track the S&P 500, this is known as...

• Index Mutual Fund

• Equity Fund

• Fixed Income Fund

• Bonds

Why would a company split its stock?

• To decrease the company's market capitalization

• To make the stock more affordable to investors

• To change the company's leadership

• To merge with another company

Why might a company want to align their stock price with their competitors?

• To increase market share

• To attract more investors

• To reduce operational costs

• To improve product quality

Name the three issuers of bonds as used in investment contexts.

• Governments, Municipalities, Corporations

• Banks, Insurance Companies, Pension Funds

• Individuals, Partnerships, Trusts

• Stock Exchanges, Brokers, Dealers

Which type of bond is considered the safest?

• Corporate bonds

• Municipal bonds

• Treasury bonds (Government Bonds)

• Junk bonds

Why are US Treasuries considered the safest bond investments?

• They offer the highest interest rates.

• They are backed by the US government.

• They are available in unlimited quantities.

• They can be traded internationally with ease.

What is implied by the statement that investments are 'backed by the 'Full Faith and Credit' of the US Government'?

• The investments are guaranteed by the personal assets of government officials.

• The investments are subject to market risks and are not guaranteed.

• The investments are guaranteed by the US Government, ensuring their safety and security.

• The investments are managed by the US Government but have no guarantees.

What is the process called where each share of a stock is replaced with a larger number of lower-priced shares, while keeping the total value of one's investment the same?

• Stock dilution

• Stock split

• Stock merger

• Stock acquisition

What are dividends?

• Penalties paid to stockholders for poor company performance

• Share of the profits paid to stockholders

• Monthly fees that stockholders pay to the company

• Loans taken by the company from stockholders