Investing and Estate Planning Quiz

The most common relationship between risk and return in investing can be stated as:

• Higher risk indicates lower potential return

• Higher risk indicates higher potential return

• Lower risk indicates higher potential return

• No relationship exists between risk and return

It is best to have a rate of return on an investment that is ______ than the rate of inflation _______.

• Lower; to minimize taxes

• Lower; to minimize risk

• Higher; to maintain purchasing power

• Higher; to increase risk

A(n) _______ investor is one who is NOT willing to take much risk in their investments.

• Speculative

• Conservative

• Moderate

• Aggressive

Which of the following is NOT true in regards to investing in stock?

• A stockholder owns part of a company.

• Depending upon the current market price, stockholders may pay different prices for the same stock.

• A stockholder may or may not receive a dividend.

• A stockholder will always receive a profit when the stock is sold.

If you invest in stocks with the hope that the value of the shares will increase over time, you would be more likely to invest in ________.

• Growth stock

• Common stock

• Income stock

• Preferred stock

If you invest in stocks that pay regular dividends, you are investing in ___________.

• Growth stock

• Common stock

• Income stock

• Preferred stock

The first completely electronic stock exchange was the _________.

• Dow Jones Industrial Average

• Standard & Poor’s 500

• NASDAQ

• New York Stock Exchange

A person who is licensed to buy and sell stocks on behalf of others, provide investment advice, and collect a commission on each purchase or sale is called a __________.

• Bank clerk

• Accountant

• Stock Broker

• Retail Investor

This index is a weighted average of 30 different blue chip stocks known as the ____________.

• Standard and Poor’s 500

• Dow Jones Industrial Average

• Fortune 1000

• Bond Index

The Standard and Poor’s 500 index increases in value an average of _____% each year.

• 3%

• 8%

• 10%

• 14%