WorksheetsFinance and Investment Pretest
Total questions: 25
Worksheet time: 45mins
Which investment represents ownership in a company?
Bond
Stock
Certificate of Deposit
Mutual fund
Which investment typically pays regular interest and returns principal at maturity?
Common stock
Preferred stock
Bond
ETF
What is the primary purpose of an Initial Public Offering (IPO)?
To allow employees to sell stock
To raise capital for a company
To pay dividends to shareholders
To merge with another company
Which of the following best describes diversification?
Investing only in high-risk assets
Buying stocks frequently
Spreading investments across different assets
Investing only in one industry
Which organization provides a marketplace where stocks are bought and sold?
Federal Reserve
Stock exchange
Insurance company
Credit union
What is one major benefit of online brokerage platforms?
Guaranteed profits
Lower transaction costs and faster trades
Elimination of risk
Higher minimum investment requirements
A cash dividend is best described as:
Additional shares issued to investors
A payment made directly to shareholders
A reduction in stock price only
A type of bond interest
Which is a potential reason a company might repurchase its own stock?
To increase the number of shares outstanding
To signal confidence in the company
To reduce ownership concentration
To eliminate dividends permanently
Which investment generally carries the highest risk and highest potential reward?
U.S. Treasury bonds
Savings account
Common stock
Certificate of Deposit
Which retirement plan is typically sponsored by an employer?
Roth IRA
Traditional IRA
401(k)
Brokerage account
Explain one advantage and one disadvantage of investing in stocks.
What role do brokers play in securities transactions?
Describe one factor a company should consider when deciding whether to issue a cash dividend or a stock split.
What is the purpose of diversification in an investment portfolio?
A company’s stock table shows a high P/E ratio. What might this suggest about investor expectations?
Identify two components commonly found in a company’s annual report and explain why they are useful to investors.
Explain two benefits and one cost of investing.
Why is effective debt management important for both individuals and corporations?
List two steps a financial planner would take when creating a personal budget.
Why is corporate governance important to stockholders?
Which best describes a company’s corporate financial structure?
How a company markets its products
The mix of debt, equity, and retained earnings used to finance operations
The number of employees in each department
The daily stock price of the company
If a company relies heavily on debt to finance its operations, which risk is most likely to increase?
Market risk
Liquidity risk
Interest and default risk
Diversification risk
Explain one advantage and one disadvantage of financing a company through equity rather than debt.
What is the primary role of a financial analyst within a corporation?
How might a financial analyst use financial statements to advise management on future investment or financing decisions?
