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Personal Finance Exam Review 6
Test Description: Final exam review
Instructions: Answer all questions to get your test result.
1) The use of long-term savings to earn a financial reward is called
A
diversifying.
B
speculating.
C
investing.
D
gambling.
2) According to the Rule of 72, if an investment of $5,000 is yielding an average of 6 percent, it will take ___ years for that investment to be worth $10,000.
A
6
B
36
C
12
D
72
3) Which of the following is typically the first stage of investing?
A
strategic investing
B
speculation
C
a put-and-take account
D
systematic investing
4) Maximization of return in the next five to ten years is the goal of which investment strategy?
A
speculation
B
systematic investing
C
strategic investing
D
initial investing
5) This type of risk is caused by the business cycle.
A
interest-rate risk
B
political risk
C
market risk
D
industry risk
6) All of the following are wise investment practices except
A
define your financial goals.
B
keep good financial records.
C
make your decisions quickly to take advantage of the market.
D
seek good investment advice.
7) A daily newspaper that provides detailed coverage of the business and financial world is
A
The Wall Street Journal.
B
Barron's.
C
Kiplinger's Personal Finance.
D
The Economist.
8) Professional investment planners who are trained to give investment advice based on your goals, age, lifestyles, and other factors are called
A
certified financial planners.
B
discount traders.
C
day traders.
D
certified public accounts.
9) Which of the following would be considered the lowest risk investment?
A
real estate
B
a stock
C
a corporate bond
D
an annuity
10) The right, but not the obligations, to buy or sell a commodity or stock for a specified price within a specified time period is called a(n)
A
option.
B
future.
C
discount bond.
D
annuity.
11) Which of the following would be considered an odd lot of stocks?
A
50 shares
B
100 shares
C
200 shares
D
1,000 shares
12) An increase in the value of a stock over time is called a(n)
A
investment.
B
dividend.
C
capital gain.
D
yield.
13) A common stock
A
pays a fixed dividend.
B
has no voting rights.
C
allows stockholders to influence corporate policy.
D
is less risky than preferred stock.
14) Stocks in young, often small corporations that have higher overall risk than stocks of successful, long-established companies are called
A
emerging stocks.
B
blue chip stocks.
C
defensive stocks.
D
growth stocks.
15) The price for which a stock is bought and sold in the marketplace is called the
A
par value.
B
yield.
C
dividend.
D
market value.
16) Current Profit on Stock/Purchase Price + Commission=
A
Net Yield
B
Earnings per Share
C
Interest Rate.
D
Return on Investment
17) Which of the following is not a securities exchange?
A
AMEX
B
NASDAQ
C
NYSE
D
all of these are securities exchanges
18) Which of the following investment techniques would more likely be used by a day trader?
A
buying and hilding
B
buying on margin
C
dollar-cost averaging
D
reinvesting dividends
19) Using dividends previously earned on a stock to buy more shares is called
A
preferred reinvestment.
B
direct investment.
C
short selling.
D
dividend reinvestment.
20) The price of a share of stock divided by the corporation's earnings over the past 12 months is the
A
ROI.
B
P/E ration.
C
percent yield.
D
earnings per share.
*select an answer for all questions
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