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Review Quiz Principals of Business

Total questions: 75

Worksheet time: 36mins

Name
Class
Date
1.

A type of investment that invests in a lot of different companies is called

a)

Stocks

b)

Bonds

c)

Mutual funds

d)

T-bills

2.

What is a stock?

a)

A loan an investor makes to a company or government that pays interest over time.

b)

A share of ownership in a company

c)

A collection of investments sold as a package.

d)

An option to purchase something in the future at todays price.

3.

What is the primary reason for a company to issue stock?

a)

The stocks help investors earn a higher rate of return

b)

To raise money to grow the company

c)

To distribute the risk of bankruptcy across more investors

d)

To increase greater awareness of the company

4.

This is where your orders to buy or sell stock are sent and carried out

a)

Stock Exchange

b)

Brokerage Firm

c)

Stock Meeting Place

d)

Money Exchange

5.

All of the following are ways to earn money as a stockholder EXCEPT:

a)

getting dividends

b)

selling the stock at a higher value

c)

stock splits

d)

selling the stock at a lower value

6.

Spreading your investments around to inrease financial security

a)

Risk assessment

b)

Diversification

c)

Stocks, bonds & cash

d)

Liquidity trap

7.

Professionally managed, diversified investment that pools resources of many investors

a)

Treasury bonds

b)

Stock index

c)

Mutual fund

d)

Saving account

8.

Ownership in a publicly traded corporation

a)

CD-certificate of deposit

b)

Money Market

c)

Treasury bill

d)

Stock

9.

If you bought a stock at $20 a share and now it's worth $40 a share how much do you make per share if you sell all your stock now?

a)

$10

b)

$40

c)

$20

d)

-$20

10.

A key difference between saving and investing is

a)

Saving is for everyone, investing is for the wealthy

b)

Your money is insured when investing, it is not in savings

c)

Investing has a guaranteed return, savings does not

d)

Saving is for emergencies & goals, investing is for long-term wealth

11.

Why is compound interest more beneficial than simple interest? (hint: choose 2 correct answers)

a)

Your money grows faster when it is compounded

b)

You earn interest on your interest

c)

Fees for compound interest are greater than simple interest

d)

Compound interest is hard to calculate, so fewer use it

12.

Which would be considered the highest risk investment type?

a)

Stock

b)

Mutual Fund

c)

Bond

d)

Money Market Account

13.

The relationship between risk and return can be stated as

a)

Higher risk indicates higher return

b)

Higher risk indicates lower return

c)

Lower risk indicates higher return

d)

No relationship exists between risk and return

14.

Which is true about Initial Public Offerings (IPOs)? (hint: choose 3 correct answers)

a)

IPOs occur when a private company becomes publicly traded

b)

All companies file an IPO

c)

The value of an IPO can be difficult to measure

d)

When an IPO occurs, a company raises money to grow the business

15.

Brokers who suggest specific investments, create an investment plan, & make adjustments are

a)

Discount/Online Brokers

b)

Discount Brokers with Assistance

c)

Full-Service Brokers

d)

Money Managers

16.

A diversified portfolio is desirable because

a)

It limits investment choice

b)

It's a good predictor on rate of return

c)

It increases risk and return

d)

It decreases risk

17.

Which of the following accurately describes asset allocation? (hint: choose 2 correct answers)

a)

Well-balanced portfolio of different stock classifications

b)

Dividing among different asset categories based on risk

c)

Dividing among different asset categories based on time

d)

Chance your investment won't be worth as much in the future

18.

Why is it important to start investing as soon as possible?

a)

You take less risk when you are young, so money will be safe

b)

You have more time for your money to compound

c)

Investing is an easy way to make quick money

d)

Fees on investments are cheaper when you are younger

19.

True or False: Investing in a diversified portfolio of stocks guarantees you will not lose money.

a)

True

b)

False

20.

Which of the following is defined as, "Skeptical/negative market conditions."

a)

Bull Market

b)

Bear Market

21.

Which of the following is defined as, "Positive/ambitious market conditions."

a)

Bull Market

b)

Bear Market

22.

People typically respond to bull markets by...

a)

Buying stocks

b)

Selling stocks

c)

Not acting

23.

People typically respond to bear markets by...

a)

Buying stocks

b)

Selling stocks

c)

Not acting

24.
Corporations must pay dividends to stock holders regardless of profits
a)
YES
b)
NO
25.
An organized market where stocks and  bonds are traded
a)
company
b)
exchange
c)
index
d)
farmers
26.
A bull market is a sign of rising stock prices
a)
YES
b)
NO
27.
—Buying little pieces of a whole lot of different companies
a)
Stocks
b)
Bonds 
c)
Mutual funds
d)
T-bills
28.
Savings account with higher interest rate (variable rate)
a)
Certificate of Deposit
b)
Regular savings
c)
Money market 
d)
Money order
29.
What is inflation?
a)
The general rise in prices
b)
The uncertainty the return on an investment will deviate from what is expected
c)
The number of times something happens to money
d)
The projected value of an ivestment at the end of a specified time frame
30.
The relationship between risk and return in investing can be stated as:
a)
higher risk indicates lower potential return
b)
higher risk indicates higher potential returns
c)
lower risk indicates higher potential return
d)
No relationship exists between risk and return
31.
A diversified portfolio is desirable because it...
a)
Increases the risk/return ratio
b)
Limits investors' choices to inly one or two investment tools
c)
Indicates an investor is a good predictor of the return an investment will have
d)
Decreases risk by investing money in a variety of investment tools
32.
Conner wants to purchase stocks with the money he received from his tax return. Who would he contact to make the transaction?
a)
A brokerage firm
b)
The New York Stock Exchange
c)
A real estate agent
d)
The American Stock Exchange
33.
What is a mutual Fund?
a)
A loan an investor makes to a company or government that pays interest over time.
b)
A share of ownership in local government.
c)
A collection of investments sold as a package.
d)
An option to purchase something in the future at todays price.
34.
What is a stock?
a)
A loan an investor makes to a company or government that pays interest over time.
b)
A share of ownership in a company
c)
A collection of investments sold as a package.
d)
An option to purchase something in the future at todays price.
35.
What is the primary reason for a company to issue stock?
a)
The stocks help investors earn a higher rate of return
b)
To raise money to grow the company
c)
To distribute the risk of bankruptcy across more investors
d)
To increase greater awareness of the company
36.
Which of the following statements best explains the purpose behind diversifying your portfolio.
a)
All's well that ends well
b)
Don't put all your eggs in one basket
c)
Everything in moderation.
d)
Just do it.
37.
Provides information and advice as well as buys and sells stock for their customers.
a)
Stock Market
b)
Stock Broker
c)
Full-Service Broker
d)
Banker
38.
An individual retirement account that is not sponsored by an employer.
a)
401K
b)
Roth Stock
c)
IRA
d)
Mutual Fund
39.
Employer sponsored retirement savings plan.
a)
401K
b)
IRA
c)
Individual Retirement Account
d)
Roth IRA
40.
Interest calculated on both the principal and the accrued interest
a)
Simple interest
b)
Compound interest
41.
Savings accounts have _______  interest rates.
a)
Low
b)
High
42.

A pool of money collected from many investors, and used to buy stocks, bonds, and other securities.

a)

stock

b)

mutual fund

c)

bond

d)

goals

43.

Much less risky

a)

saving

b)

investing

44.

Deposit is usually not insured

a)

investing

b)

saving

45.

Provides fixed interest payments for a set period of time

a)

money

b)

stock

c)

bond

d)

mutual fund

46.

All are benefits of saving, except

a)

safe, reliable, convenient

b)

earns a higher return of interest

c)

earns a small amount of interest

d)

insured by the FDIC

47.

Bonds are a safer investment than stocks

a)

True

b)

False

48.

Saving and investing provide opportunities to increase your wealth, leading to financial security

a)

True

b)

False

49.
Spreading your investments around to inrease financial security
a)
Risk assessment
b)
Diversification
c)
Stocks, bonds & cash
d)
Liquidity trap
50.
Professionally managed, diversified investment that pools resources of many investors
a)
Treasury bonds
b)
Stock index
c)
Mutual fund
d)
Saving account
51.
Ownership in a publicly traded corporation
a)
CD-certificate of deposit
b)
Money Market 
c)
Treasury bill
d)
Stock
52.
World's largest stock exchange founded in 1790.
a)
NASDAQ
b)
AMEX
c)
NYSE
d)
EuroNext
53.
When things are more expensive next year than this year that it is called . . . 
a)
deflation
b)
inflation
c)
inspiration
d)
insultation
54.
What is happening if stocks are in a "bear market"?
a)
Going up
b)
Going down
c)
Staying even
d)
Inflation
55.
As you get older your investments should get . . .
a)
more speculative
b)
more conservative
c)
more risky
d)
age does not matter
56.

What are two purposes for investing? (select two)

a)

growing wealth

b)

avoiding taxes

c)

saving for emergencies

d)

saving for long-term goals

57.

When should you begin investing so that you can take advantage of compound interest?

a)

as early as possible

b)

when your career is established

c)

after making over $100,000

d)

around age 50

58.

Which term describes how easily you can access the money you have invested?

a)

Liquidity

b)

Opportunity Cost

c)

Inflation

d)

Diversification

59.

Which term describes how unpredictable and risky an investment might be?

a)

Liquidity

b)

Opportunity Cost

c)

Volatility

d)

Diversification

60.

The phrase "don't put all your eggs in one basket" is used to illustrate the importance of _____.

a)

stock options

b)

debt repayments

c)

high-risk investments

d)

diversifying investments

61.

An investment in the partial ownership of a company is called a _____.

a)

Stock

b)

Bond

c)

Mutual Fund

d)

Money Market

62.

An investment into a professionally managed account with many types of investments owned by several shareholders is called a ______.

a)

Stock

b)

Bond

c)

Mutual Fund

d)

Money Market

63.

When does a person actually gain or lose money on an equity investment?

a)

when he pays taxes

b)

when he purchases the investment

c)

when it appreciates or depreciates

d)

when he sells the investment

64.

The money made from selling an equity investment is called _____.

a)

commission

b)

liquidity

c)

capital gains

d)

bond

65.
Debt investment in which investor loans money to an entity, usually corporate or governmental
a)
Bond
b)
Stock
c)
Cash
d)
Annuity
66.
Risky investments
a)
Are meant to make small returns on investment
b)
May lead to a larger return on investment
c)
Are always long-term
d)
Involve checking accounts
67.
A mutual fund is 
a)
An investment in a diversified group of stocks
b)
The money left over when reinvested into the company
c)
An account that guarantees a fixed rate of return
d)
Exclusively for retirement accounts
68.
A bond may finance the needs of all of the following except
a)
Local governments
b)
The federal government
c)
Corporations
d)
Private companies
69.
Which is the least risky?
a)
Stock
b)
CD
c)
Savings account
d)
Mutual fund
70.
A corporation whose ownership is dispersed among the general public in many shares of stock which are freely traded on a stock exchange or in over the counter markets is considered
a)
Privately held
b)
Publicly held
c)
Stocked up
d)
A stock exchange
71.

People who own shares of a company

(a)  

72.

Initial Public Offering

(a)  

73.

What does IPO stand for?

a)

Investing Portfolio Opportunity

b)

Initial Public Offering

c)

Intergalactic Processing Organization

d)

Introductory Policy Ordinance

74.

Collection of investments owned by one person or organization

a)

Portfolio

b)

Risk

c)

Investor

d)

Stock Market

75.

A portion of a company’s earnings that is paid to shareholders, or people that own that company’s stock, on a quarterly or annual basis

a)

Dividend

b)

Interest

c)

Compound Interest

d)

Capital gain

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