W!SE Practice Test Questions - INVESTMENTS

A person bought stock for $4,000 and one year later she sold it for $1,000. The sale resulted in

• Price earnings

• Market value

• Capital loss

• Dividend yield

A brother and sister received an inheritance of $100,000. The plan to invest the money to buy a house in two years. Which investment on the list below has the most risk?

• Savings accounts

• Common stocks

• Corporate bonds

• Checking accounts

Municipal bonds are

• Issued by corporations to raise money for expansion

• Issued by local governments to raise money for construction projects

• Guaranteed to pay high dividends to the investor

• Taxes used to raise money for important city operations

A person invested $50 in a growth mutual fund each month for the past ten years. This investment strategy is known as

• Portfolio diversification

• Asset allocation

• Dollar-cost averaging

• Direct deposit

The following retirement product that does NOT require a 62-year-old retiree to pay taxes on the amount withdrawn is a

• Yearly pension of $40,000

• Traditional Individual Retirement Account (IRA)

• 401(k) plan account

• Roth Individual Retirement Account (Roth IRA)

Which of the following is NOT a finance-related career?

• Banker

• Accountant

• Certified financial planner (CFP)

• Psychologist

Before making an investment in stocks, a person should know:

• The future increase in the price

• His potential future income

• His risk tolerance

• The company’s Chief Executive Officer (CEO)

If a public corporation wants to raise capital but NOT create debt, it can:

• A) Issue a bond

• B) Issue common stock

• C) Borrow money from a commercial bank

• D) Borrow money from the government

Which of the following careers would be a possible choice for someone interested in money and finance?

• Insurance broker

• Crime scene investigator

• Dental hygienist

• Social worker

The stock of a well-known company with a long record of profits, growth and/or dividend payment and a reputation for quality management, products, and services is considered a:

• Risk-free stock

• No-load stock

• Speculative stock

• Blue chip stock