Wise/Midterm Part 2: Question Preview (ID: 15994)

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You want to buy a stock that pays dividends. What should you buy?
a) growth stock
b) income stock
c) common stock
d) preferred stock

A bond has a coupon rate of 5 percent per year, and a par value of $2,000. How much interest will you receive each year?
a) $2,500
b) 200
c) $100
d) 1

Which of these is the most risky for investors?
a) savings bonds
b) corporate bonds
c) Treasury bonds
d) municipal bonds

Which describes a bear market?
a) Stocks are staying the same.
b) Some stocks are going up and some are going down.
c) Most stock prices are rising.
d) Most stock prices are falling.

What is the difference between a primary market and a secondary market?
a) the primary market refers to the market where securities are created, while the secondary market is one in which they are tra
b) primary market: paid first if a firm is in trouble; secondary market: gets what is left.
c) primary market: money lent for less than a year; secondary market: money lent for a longer time
d) all

Why might you choose an investment with high risk instead of one with low risk?
a) for greater liquidity
b) for a higher return
c) to avoid losing money
d) for a lower return

The ________ monitors companies to make sure they disclose meaningful financial and other information so you have access to the information you need to make healthy investment decisions.
a) Federal Deposit Insurance Corporation
b) Office of the Comptroller of the Currency
c) Federal Reserve Board
d) Securities and Exchange Commission

You ________ interest on debt.
a) charge
b) Pay
c) Earn
d) Dividend

The main purpose of the FDIC is to make sure that
a) commercial and investment banks do not fail.
b) customers do not lose money if a bank fails.
c) banks charge a fair amount of interest on loans.
d) the government has enough gold to cover its expenses.

What is the difference between simple and compound interest?
a) Simple interest is paid by consumers. Compound interest is paid by corporations.
b) Simple interest is paid at a fixed rate that does not change. Compound interest is paid at an adjustable rate that might go
c) Simple interest is paid on the principal. Compound interest is paid on both the principal and the interest it earns.
d) Simple interest is paid on credit card debt. Compound interest is paid on a mortgage or business loan.

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