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