WorksheetsInvesting and Estate Planning Quiz
Total questions: 25
Worksheet time: 13mins
The most common relationship between risk and return in investing can be stated as:
Higher risk indicates lower potential return
Higher risk indicates higher potential return
Lower risk indicates higher potential return
No relationship exists between risk and return
It is best to have a rate of return on an investment that is ______ than the rate of inflation _______.
Lower; to minimize taxes
Lower; to minimize risk
Higher; to maintain purchasing power
Higher; to increase risk
A(n) _______ investor is one who is NOT willing to take much risk in their investments.
Speculative
Conservative
Moderate
Aggressive
Which of the following is NOT true in regards to investing in stock?
A stockholder owns part of a company.
Depending upon the current market price, stockholders may pay different prices for the same stock.
A stockholder may or may not receive a dividend.
A stockholder will always receive a profit when the stock is sold.
If you invest in stocks with the hope that the value of the shares will increase over time, you would be more likely to invest in ________.
Growth stock
Common stock
Income stock
Preferred stock
If you invest in stocks that pay regular dividends, you are investing in ___________.
Growth stock
Common stock
Income stock
Preferred stock
The first completely electronic stock exchange was the _________.
Dow Jones Industrial Average
Standard & Poor’s 500
NASDAQ
New York Stock Exchange
A person who is licensed to buy and sell stocks on behalf of others, provide investment advice, and collect a commission on each purchase or sale is called a __________.
Bank clerk
Accountant
Stock Broker
Retail Investor
This index is a weighted average of 30 different blue chip stocks known as the ____________.
Standard and Poor’s 500
Dow Jones Industrial Average
Fortune 1000
Bond Index
The Standard and Poor’s 500 index increases in value an average of _____% each year.
3%
8%
10%
14%
When a private company wishes to raise capital to expand, it can issue shares to the public through a process called
Stock buy-back
Liquidating assets
Mergers and acquisitions
Initial public offering
A company that is not publicly traded is said to be ________.
Private
Public
Bonded
Aggressive
A bond is a _________.
Type of debt that a company issues to investors for a specified period of time
Share of ownership in a company
Type of investment that is only offered by depository institutions
Type of investment that has the potential for significant fluctuations over a short period of time
Mutual funds are ______.
Speculative investments that are managed without fees
Diversified investments comprised of a variety of stocks and bonds
A form of real estate investment owned by multiple investors
A riskier investment when compared to ownership in a single company’s stock
A company needs to raise cash to expand, but it does not want to issue stock. A company can raise cash by selling _________ and paying interest.
Preferred shares
Dividends
Bonds
Contracts
A(n) _______ is a group of companies producing a similar product or service.
Franchise
Industry
Competitor
Mutual fund
Your investment portfolio includes stocks, mutual funds, and bonds to lessen her risk of losing money. This is an example of _______.
Compounding
Risk assessment
Diversification
Clustering
You would like to be an owner of McDonald’s but do not have enough money to buy a franchise. Your next best option would be to invest in which investment tool?
Bonds
Stocks
IRA
401(k)
Which investment tool allows you to invest your money in a diversified portfolio of stocks and bonds?
Mutual funds
Municipal bonds
Index funds
NASDAQ
Many people choose to invest in real estate because _______.
Its value usually increases over a long period of time.
It can be used to generate rental income.
It’s completely risk-free.
Baseball cards, Pokemon cards, and Beanie Babies are what type of investment?
Mutual funds
Collectibles
Guaranteed investments
Municipal bonds
A guaranteed source of retirement income is _______.
Social Security
A company pension
A company profit-sharing plan
None of the above
Which of the following describes a 401(k) plan?
The money is invested BEFORE taxes are calculated on your salary.
The company may contribute some money to your investment.
It helps you save money for retirement.
All of the above
If you do not work for a company that offers a 401(k) or other employer-sponsored tax deferred savings plan, you can open a(n) _______ that allows you to save up to $7000 a year tax deferred.
IRA
403(b)
NYSE
457(b)
Which of the following should be a consideration when planning our estate?
Creating tax shelters
Establishing trusts (a safe place for money) for minor children
Writing a will
All of the above
