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WorksheetsIM Test 2 Review
Total questions: 20
Worksheet time: 28mins
The ______ ______ of why a stock price changes is that the price movement of a stock indicates what investors feel a company is worth.
principal theory
principal meadows
Stock Change
Money Theory
Who is the lender when it comes to bonds?
you
the bank
your uncle vinny
your broker
What type of rate does a floating-rate bond have?
fixed
variable
unlimited
limited
DCA is a technique by which, regardless of the share price, a _______ dollar amount is invested on a regular schedule.
fixed
varaible
limited
unlimited
Paige is considering two investment opportunities for bonds. The taxable (corporate) one has a 8% interest rate, the tax-free (municipal) offers an 6% interest rate. Paige is in the 25% tax bracket. Which bond should Paige purchase?
corporate
either one since the yields are the same
municipal
Johnny Bananas buys 8 bonds with a face value of $1,000 each, a coupon of 4.5%, and a maturity of 5 years. How much in total interest will he receive from the bonds in 5 years?
$2,925
$1,800
$2,500
$5,750
If you invest $25,000 today at 4% interest compounded annually, how much will you have in 5 years?
$33,878.67
$30,416.32
$27,500.00
$24,250.00
Current risk-free rate = 6%
Expected S&P 500 return = 11%
Beta of risky stock ABC = 1.8 What is the Required (Expected) Return of ABC stock?
20%
15%
12%
11%
Which statement is FALSE
Most bonds pay interest semi-annually.
Investing is gambling.
A portfolio combines different assets mixed for the purpose of achieving an investor's goal.
When you purchase a bond, you are lending out your money to a company or government.
Which statement is FALSE
Investors need to know how much volatility he or she can stand in their investments.
The underlying principle of asset allocation is that the older you get, the less risk you should have.
As a general rule, the longer your time horizon, the more conservative your portfolio should be.
To correctly diversify, you should buy stocks that vary by industry.
Which statement is FALSE
Holding a company’s stock means that you are one of the many owners of the company.
The Random Walk Theory says that stocks take a random and unpredictable path.
Some examples of investment vehicles are stocks, bonds, mutual funds, & real estate.
The amount of risk you can comfortably undertake is the same for everyone.
Which statement is TRUE
Being a shareholder of a company means you have a say in the day-to-day running of the business.
Trying to time the market is an easy strategy.
There is always risk when investing in stocks.
There is generally more risk in owning bonds compared to owning stocks.
Cash payment from profits announced by a company's board of directors and distributed among stockholders.
Dividends
Inflation
Capital
Speculation
The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
Dividends
Inflation
Capital
Speculation
Financial assets or the financial value of assets such as cash.
Dividends
Inflation
Capital
Speculation
Financial assets or the financial value of assets such as cash.
Dividends
Inflation
Capital
Speculation
A measure of risk, or volatility.
Beta
stock
compounding
diversification
A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
Beta
stock
compounding
diversification
The ability of an asset to generate earnings that are then reinvested and generate their own earnings.
Beta
stock
compounding
diversification
A risk management technique that mixes a wide variety of investments within a portfolio.
Beta
stock
compounding
diversification
