WorksheetsInvesting CCA/Final Review
Total questions: 50
Worksheet time: 30mins
Brokerage firm
Facilitates the buying and selling of investments from a stock exchange
The specified time in the future when the principal (or initial investment) amount of the bond is repaid to the bondholder
Mutual fund
Created when a company combines the funds of many different investors and then invests that money in a diversified portfolio of investments
The profit or income generated by saving and investing
The rise in the general level of prices
Portfolio diversification
Reduces risk by spreading money among a wide array of investments
Assets purchased with the goal of providing additional income from the asset itself but with the risk of loss
The profit or income generated by saving and investing
Rate of Return
The net gain or loss of an investment expressed as a percentage of the purchase price of an investment.
A fee charged for the use of property or land
Have the potential for significant fluctuations in return over a short period of time
Elliot’s stock broker is suggesting that he consider investing in a diversified portfolio. A diversified portfolio is desirable because it:
increases the risk/return ratio
limits investors choices to only one or two investment tools
indicates an investor is a good predictor of the return an investment will have
decreases risk by investing money in a variety of investment tools
The market is doing poorly and investors are not confident in the economy. Investors are not purchasing stocks and are selling what is already owned
Bear market
Growth market
Bull market
Dog market
Shares or units of ownership in a public corporation. The shareholder has voting rights in the corporation.
Common stock
Growth Stock
Income Common stock
Preferred Stock
Distributions of earnings paid to stockholders.
Income
Dividends
Bond
Investment
The amount a willing buyer will pay a willing seller for a stock.
Market Price
Common Price
Bull Price
Close Price
Measures the size of the company. It is calculated by multiplying the number of outstanding shares by the current stock price.
Price Capitalization
Market Capitalization
IPO
Growth Capitalization
The oldest and largest exchange with the strictest company standards.
New York Stock Exchange
NASDAQ
Commodities market
What is the relationship between risk and return?
Higher rate of return = Lower risk, Lower Rate of return = Higher risk
Higher rate of return = greater risk, Lower Rate of return = lower risk
Higher rate of return and Lower Rate of return are same
The purpose of the risk pyramid is to show a comparison of:
one investment to another.
stocks to stock mutual funds.
corporate bonds to municipal bonds.
one stock to another.
Which of the following is an advantage of investing in bonds?
They are very low risk
You can access your money any time
They are insured by the FDIC
They offer extremely high rates of return
What is the differences between stocks and bonds?
They are both investments.
A stock is what corn grows on, and a bond gets you out of jail.
Stock represents ownership, and bonds represents your word.
A stock represents ownership, and bonds represents a loan.
A type of investment that invests in a lot of different companies is called
Stocks
Bonds
Mutual funds
T-bills
All of the following are ways to earn money as a stockholder EXCEPT:
getting dividends
selling the stock at a higher value
stock splits
selling the stock at a lower value
Brokers who suggest specific investments, create an investment plan, & make adjustments are
Discount/Online Brokers
Discount Brokers with Assistance
Full-Service Brokers
Money Managers
The Investment Pyramid -
The safer the investment, the lower it can be found on the pyramid
The safer the investment, the higher it can be found on the pyramid
The Investment Pyramid -. The highest risk investments are junk bonds, collectibles, options, futures, and speculative stocks and these appear at the top of the pyramid.
True
False
Your returns (or interest rate) are 9% a year. How long before your investment doubles?
9 years
8 years
7 years
They won't
What calculation should you do to answer the question:
How many years will it take $900 to double if the interest rate is 2%?
72 divided by 2
900 divided by 2
2 divided by 100 times 900
A quick way to estimate how long it takes for your money to double is called...
rule of 72
compound interest
simple interest
inflation
When interest is added to the balance each year and the new balance is used to calculate the interest for the next year is called...
simple interest
compound interest
rule of 72
inflation
Fundamental Analysis of Stocks focuses on the financial statements of a company
and determines potential for future growth by analyzing revenue, earnings, return on equity and profit margins
True
False
Technical Analysis of Stock Trends focuses on the financial statements of a company and determines potential for future growth by analyzing revenue, earnings, return on equity and profit margins
True
False
A bond's interest rate
Coupon Rate
Maturity
Par Value
Yield
The length of a bond
Coupon Rate
Maturity
Par Value
Yield
The principle amount (face value)
Coupon Rate
Maturity
Par Value
Yield
The best rating a bond can receive
D
AAA
AA
B
Follows 500 stock prices to measure the health of the market
Dow Jones
S & P 500
NYSE
NASDAQ
1-4 letter symbol used to represent a company
tic tok
stocker
stock ticker
stocking
What are these? NYSE - NASDAQ
stocks
markets
stock exhanges
securities and exchanges
The Dow Jones Industrial Average tracks the stock prices of the top 30 U.S. companies.
TRUE
FALSE
When a company sells its shares of stock for the first time, it is called ______________________.
Market Cap
Initial Public Offering
Price-Earnings Ratio
Gross Profit
A pooled portfolio of different investments owned by multiple investors, managed by professionals, and subject to laws and regulations designed to protect individual investors.
Stock Exchange
Bond Market
Mutual Fund
Real Estate
A mutual fund that contains stocks to mirror a stock market index
Equity Growth Fund
Equity Value Fund
Index Fund
Aggressive Equity Fund
Index funds are _____ managed and therefore have ______ transaction costs
actively; more
actively; fewer
passively; more
passively; fewer
Inflation risk
The danger that money won’t be worth as much in the future as it is today
Reduces risk by spreading money among a wide array of investments
A general term used to describe all transactions involving the buying and selling of stock shares issued by a company
Elliot’s stock broker is suggesting that he consider investing in a diversified portfolio. A diversified portfolio is desirable because it:
increases the risk/return ratio
limits investors choices to only one or two investment tools
indicates an investor is a good predictor of the return an investment will have
decreases risk by investing money in a variety of investment tools
