Ch 4 Investing Basics: Stocks and Bonds

What is the term for the money needed to start a new business venture?

• Revenue

• Capital

• Profit

• Expense

What is an Initial Public Offering (IPO)?

• A type of bond

• A private stock sale

• The first sale of stock to the public

• A loan from a bank.

Revenue is defined as ______.

• A) Money coming into a business through sales

• B) Money spent paying bills

• C) Loans that need to be paid back

• D) Shares of ownership.

Expenses are ______.

• Money coming into a business

• Money spent paying bills

• Shares of ownership

• Loans that need to be paid back.

The formula to calculate Net Income/Loss is ______.

• Revenue + Expenses

• Revenue - Expenses

• Expenses - Revenue

• Revenue x Expenses

Which of the following is considered a basic expense for a business? A) Rent/Mortgage B) Advertising C) Travel D) Entertainment.

• Rent/Mortgage

• Advertising

• Travel

• Entertainment

What is the efficient market hypothesis?

• A theory that stock prices reflect all available information

• A belief that markets are always inefficient

• A concept that only experts can predict market trends

• A strategy for short-term gains.

Fill in the blank: Three things that move the markets and the economy are ____, ____, and ____.

• A) Interest rates, inflation, government policy

• B) Weather, luck, personal opinions

• C) Fashion trends, celebrity endorsements, social media

• D) None of the above.

Fill in the blank: Interest rates are crucial to investing because they ____.

• A) Affect borrowing costs

• B) Have no impact

• C) Are irrelevant

• D) Only matter to banks.

The Federal Reserve uses _______ to control inflation.

• Fiscal policy

• Monetary policy

• Trade policy

• Tax policy