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FinAlg Ch 5, 6

Total questions: 21

Worksheet time: 11mins

Name
Class
Date
1.

What is inflation?

a)

refers to a broad rise in the prices of goods and services across the economy over time, eroding purchasing power for both consumers and businesses.

b)

the action of inflating something or the condition of being inflated.

c)

interest accumulated from a principal sum and previously accumulated interest.

2.

What is compounding interest?

a)

interest accumulated from a principal sum and previously accumulated interest.

b)

the action of inflating something or the condition of being inflated.

c)

a general increase in prices and fall in the purchasing value of money.

3.

What is the difference between a BEAR and a BULL market?

a)

the values of stocks are on the rise in a bear market and in decline in a bull market.

b)

the values of stocks are on the rise in a bull market and in decline in a bear market.

c)

a bear market is when the market is stable and a bull market is the the market is fluctuating.

d)

a bull market is when there is a lot of pork in the market and a bear market is when the market is sleepy during the winter.

4.

What is the S&P 500?

a)

a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchange in the United States.

b)

a stock market index of 30 prominent companies listed on stock exchanges in the United States.

c)

a stock market index of 30 prominent companies listed on stock exchanges in the United States.

d)

an annual automobile race held at the Indianapolis Motor Speedway in Speedway, Indiana, United States.

5.

What is the Dow Jones?

a)

a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchange in the United States.

b)

a stock market index of 30 prominent companies listed on stock exchanges in the United States.

c)

an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume, and ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange.

d)

an annual automobile race held at the Indianapolis Motor Speedway in Speedway, Indiana, United States.

6.

What is the Nasdaq?

a)

a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchange in the United States.

b)

a stock market index of 30 prominent companies listed on stock exchanges in the United States.

c)

an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume, and ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange.

d)

an annual automobile race held at the Indianapolis Motor Speedway in Speedway, Indiana, United States.

7.

What are dividends?

a)

a payment from a company to its investors

b)

the answer when you divide two numbers

c)

a general increase in prices and fall in the purchasing value of money

d)

a performance measure used to evaluate the efficiency of an investment

8.

What is a Return on Investment (ROI)?

a)

a performance measure used to evaluate the efficiency of an investment

b)

the money you get when someone lands on your property in a game of Monopoly

c)

a payment from a company to its investors

d)

a stock market index of 30 prominent companies listed on stock exchanges in the United States

9.

Which equation do you use to calculate exponential growth?

a)

ab^x

b)

mx + b

c)

a^2 + b^ = c^2

d)

I would use a calculator

10.

Which function would you use to calculate a 7% yearly return on an investment of $1000 after x number of years?

a)
FV = 1000(1 + 0.07)^x
b)
FV = 1000 * 0.07^x
c)
FV = 1000(1 + 0.10)^x
d)
FV = 1000(1 + 0.05)^x
11.

What is a bond?

a)

A bond is ownership in a company

b)

A bond is a sum of money paid regularly to its shareholders by a company

c)

A bond is an FDIC insured investment account

d)

A bond is a loan to the government or a company that pays investors a fixed rate of return over a specified period of time

12.

What does the term coupon mean (when related to bonds)?

a)

The timeframe of the bond

b)

The annual interest rate paid on a bond

c)

The face value of the bond

d)

The discounted rate of the bond when purchased

13.

Why would someone invest in a bond with a low rating?

a)

Lower rated bonds typically have a higher coupon

b)

Lower rated bonds typically have a lower coupon

c)

Lower rated bonds are typically less expensive

d)

Lower rated bonds are typically more expensive

14.

What does it mean to diversify a portfolio?

a)
To diversify a portfolio means to focus solely on high-risk investments.
b)
To diversify a portfolio means to invest all funds in a single asset.
c)
To diversify a portfolio means to avoid any investments altogether.
d)
To diversify a portfolio means to spread investments across different assets to reduce risk.
15.

What is a portfolio?

a)
A portfolio is a collection of financial assets and investments.
b)
A portfolio is a type of insurance policy.
c)
A portfolio is a single financial asset.
d)
A portfolio is a government-issued currency.
16.

What is a fund?

a)
A fund is a type of bank account.
b)
A fund is a government grant.
c)
A fund is a personal savings plan.
d)
A fund is a pooled investment vehicle.
17.

What does it mean for a company to be a large cap company?

a)
A large cap company is one with a market capitalization of $10 billion or more.
b)
A large cap company is defined as having fewer than 1,000 employees.
c)
A large cap company is one with a market capitalization of $1 billion or more.
d)
A large cap company is one that operates in multiple countries.
18.

What is a mutual fund?

a)
A mutual fund is an investment vehicle that pools money from multiple investors to invest in a diversified portfolio.
b)
A mutual fund is a government bond that guarantees returns.
c)
A mutual fund is a loan given to businesses for expansion.
d)
A mutual fund is a type of bank account for saving money.
19.

What is an ETF?

a)
An ETF is a stock that represents ownership in a single company.
b)
An ETF is a government bond that is issued to investors for a fixed term.
c)
An ETF is a type of mutual fund that can only be purchased directly from the fund company.
d)
An ETF is an Exchange-Traded Fund that holds a collection of assets and is traded on stock exchanges.
20.

What is the main difference between a mutual fund and an ETF?

a)
Mutual funds can be traded at any time during the day like stocks.
b)
Mutual funds have lower fees compared to ETFs.
c)
ETFs are only available for institutional investors, while mutual funds are for everyone.
d)
The main difference is that mutual funds trade at the end of the day at NAV, while ETFs trade throughout the day on an exchange.
21.

What do mutual funds and ETFs have in common?

a)
Both are types of stocks that can only be traded during market hours.
b)
Both require a minimum investment of $10,000 to participate.
c)
Both are exclusively managed by individual investors without professional oversight.
d)
Both are investment vehicles that pool money from multiple investors to invest in diversified portfolios.