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Chapter 6 Quiz - Investing

Total questions: 25

Worksheet time: 13mins

Name
Class
Date
1.

Spreading risk by putting money in different types of investments is known as _____.

a)

dollar-cost averaging

b)

diversification

c)

risk tolerance

d)

variation

2.

An increase in the value of an investment is called _____.

a)

inflation

b)

net asset value (NAV)

c)

appreciation

d)

yield

3.

An overall rise in prices is called _____.

a)

a yield

b)

volatility

c)

a dividend

d)

inflation

4.

Which type of investment provides an individual with voting rights and receives dividends when declared by the company?

a)

mutual fund

b)

preferred stock

c)

bond

d)

common stock

5.

In which market does a company’s initial public offering (IPO) occur?

a)

primary

b)

secondary

c)

OTC

d)

investment club

6.

In which market do investors purchase securities from other investors rather than from the issuing company?

a)

primary

b)

secondary

c)

IPO

d)

new-issues

7.

What is a certificate of debt issued by a corporation or government?

a)

stock

b)

bond

c)

mutual fund

d)

dividend

8.

Which type of investment is created by pooling the money of many people and investing it in a collection of securities?

a)

common stock

b)

mutual fund

c)

corporate bond

d)

investment club

9.

Which of the following type of valuable goods can be considered an investment?

a)

gemstones

b)

previous metals

c)

collectibles

d)

All of the above.

10.

Investing a fixed dollar amount at regular intervals without regard to the price of the investment at the time you buy it is _____.

a)

buy-and-hold investing

b)

a dividend reinvestment plan (DRIP)

c)

dollar-cost averaging

d)

net asset value investing

11.

An extended period of falling stock prices is a bull market.

a)

True

b)

False

12.

An extended period of rising stock prices is a bear market.

a)

True

b)

False

13.

Purchasing shares in a Real Estate Investment Trust (REIT) is a way to personally buy and own rental property.

a)

True

b)

False

14.

Factors that investments should be characterized by include: Degree of volatility, rate of return, risk, and liquidity.

a)

True

b)

False

15.

To beat inflation, the rate of return that you must earn on an investment needs to be lower than the rate of inflation.

a)

True

b)

False

16.

A tax-deferred investment is one where no taxes are paid as the investment earns income and grows in value.

a)

True

b)

Value

17.

A prospectus is a short-term debt with a maturity ranging from a few days to 52 weeks.

a)

True

b)

False

18.

A dividend reinvestment plan (DRIP) allows investors to reinvest cash dividends by purchasing additional shares of stock.

a)

True

b)

False

19.

A securities exchange is where art dealers go to sell their paintings to investors.

a)

True

b)

False

20.

When shares of stock are bought or sold, this is called a stock trade.

a)

True

b)

False

21.

The price volatility of bitcoin is high when compared to most blue chip or large cap stocks.

a)

True

b)

False

22.

The definition of investing is to sell anything of value over time.

a)

True

b)

False

23.

If you buy a share of stock in a corporation, you then have ownership in that corporation.

a)

True

b)

False

24.

Level of Risk is defined by the degree to which an investment may deviate from its rate of return.

a)

True

b)

False

25.

Risk Tolerance has nothing to do with the amount of uncertainty a person is willing to handle.

a)

True

b)

False