Investment and Finance Final Review Part 1

What is a dividend?

• A sum of money paid regularly by a company to its shareholders out of its profits

• A one-time payment from a company to its shareholders

• A loan provided by shareholders to the company

• A financial penalty paid by the company to its shareholders

What does the Risk/Reward Ratio indicate?

• A ratio used by many investors to compare the expected returns of an investment to the amount of risk undertaken

• A calculation to determine the total risk in a portfolio

• A financial metric used to calculate company profit

• A method to evaluate the time value of money

What does the term "Funds" refer to in investment options?

• Collection

• Ownership

• IOU

• Partnership

What does the term "Bonds" refer to in investment options?

• Collection

• Ownership

• IOU

• Partnership

What does the term "Stocks" refer to in investment options?

• Collection

• Ownership

• IOU

• Partnership

What does the term "Net Average Value" refer to?

• Price per share in a mutual fund

• Total value of a company's assets

• Average debt ratio of a company

• Market capitalization of a company

What is compound interest?

• Interest calculated on the initial principal and also on the accumulated interest of previous periods

• Interest calculated only on the initial amount of money

• A fixed interest rate that does not change over time

• A declining rate of interest applied to decreasing principal

Which of the following is NOT an indicator of a stock being a risky investment?

• New Company

• Profits go up and down dramatically

• Company does not offer dividends

• Company has a stable market presence

How do supply and demand primarily affect stock prices?

• They determine the CEO's salary

• They dictate the number of shares available

• They influence the stock price volatility

• They set the governmental regulations on trading