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WorksheetsCh. 11: Financial Markets
Total questions: 40
Worksheet time: 20mins
_____ refers to the time at which payment to a bondholder is due.
par value
coupon rate
maturity
A _____ is an option to buy shares of stock at a specified time in the future.
call option
portfolio
bear market
____ is defined as the annual rate of return on a bond if the bond were held to maturity.
yield
dividend
coupon rate
A _____ is an option to sell shares of stock at a specified time in the future.
call option
put option
bull market
Spreading out your investments to reduce risk is known as _____.
portfolio
diversification
par value
_____ is defined as an action taken today that will create benefits in the future.
diversification
yield
investment
A(n) _____ is a stock that reinvests its earnings in the business instead of paying regular dividends.
growth stock
municipal bond
mutual fund
A _____ is defined as an investment report to potential investors.
portfolio
prospectus
pension fund
_____ is the difference between a higher selling price and a lower selling price, resulting in a financial gain for the seller.
yield
capital loss
capital gain
_____ is defined as money an investor receives above and beyond the sum of money initially invested.
return
stock
bond
By utilizing _____, an investor can earn profits by buying bonds at a cut rate.
coupon rate
discount from par
daytrading
_____ refers to a period of time during which the stock market steadily rises.
maturity
bull market
financial asset
In a _____, many investors sell their stocks in anticipation of lower profits.
mutual fund
capital gain
bear market
_____ is defined as the amount paid to purchase a bond that will be repaid at maturity.
maturity
par value
coupon rate
With a _____, the savings of many individuals are pooled together and invested in a variety of stocks, bonds, and other financial assets.
mutual fund
municipal bond
call option
____ is defined as a claim on the property or income of a borrower.
financial asset
stock
equity
A _____ is defined as a collection of financial assets.
portfolio
pension fund
prospectus
Which of the following is a stock exchange which features technology companies, and all trades are done on the computer?
the S & P 5000
NYSE
Dow Jones
Nasdaq
The practice of making high risk financial decisions in hopes of getting a big return is called
diversification.
speculation.
day trading.
junk bond.
A _____ is a lower-rated, potentially higher-paying bond.
pension fund
junk bond
common stock
municipal bond
Corporations pay out part of their profits in the form of a _____ to their stockholders.
coupon rate
call option
bond
dividend
Which of the following would NOT directly cause the price of a stock to change?
A shiny new corporate office building in sunny Florida
Supply and Demand
Company earnings
How investors feel about the company
All of the following are examples of financial intermediaries EXCEPT
a credit union.
a finance company.
a stock certificate.
a life insurance company.
To finance the building of a new police station, the government of the city of Richmond is MOST likely to issue a
junk bond.
treasury bond.
municipal bond.
money market bond.
A stock split is MOST likely to occur when
a company is losing money.
the price of a stock becomes too high.
the stock market is doing poorly overall.
stockholders demand higher dividends.
You are a financial advisor whose client wants stocks that pay regular dividends. You advise him to buy
income stock.
common stock.
preferred stock.
growth stock
Buying stock in order to sell it quickly in an effort to have your money grow faster than the general level of stock prices is known as
early phase of development.
diversification.
long-term investing.
short-term investing.
Using the Standard & Poor’s index to gauge bond quality, which of the following symbols correctly identifies the highest investment grade?
AAA
Aaa
C
D
A __________ generally declines less during a recession and shows less growth during an expansion than other stocks.
junk bond
cyclical stock
defensive stock
income stock
Purchasing a stock by paying only a fraction of its price and borrowing the remainder of the purchase price is called
buying in a bull market.
buying in a bull market.
buying on debt.
buying on margin.
Which of the following is the only correct example of equity?
a treasury bill
a treasury bond
a share of stock
a long-term certificate of deposit
Which of the following is the only correct example of a blue-chip stock?
A large, well-known company traded on the NYSE
An established company that is traded over the Internet
A foreign-owned company that operates in the US
A new start-up firm
All of the following are basic components of bonds EXCEPT
par value
coupon rate
maturity
liquidity
In a(n) __________, people who specialize in buying and selling stock represent the interests of a company without the company actually getting involved.
OTC market
primary market
bear market
secondary market
The index that shows how certain stocks have traded every business day since 1896 is called
NYSE
Nasdaq
S & P 500
Dow Jones
In which of the following structures are the most trade made?
OTC market
NYSE
Nasdaq
Chicago Board of Trade
A _________ generally declines more during a recession and shows more growth during an expansion than other stocks.
junk bond
cyclical stock
income stock
defensive stock
To __________ means to base decisions on an assessment of costs and benefits.
speculate
day trade
diversify
economize
Which of the following includes investors as actual voting owners of the company?
income stock
common stock
growth stock
preferred stock
Which of the following is NOT a characteristic of savings bond?
they are issued by the government
they can be used to help pay for public works project
they are sold in low denominations
they carry a high risk
