Personal Finance Exam Review 6 Question Preview (ID: 42412)
Final Exam Review.
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The use of long-term savings to earn a financial reward is called
a) investing.
b) gambling.
c) speculating.
d) diversifying.
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) 12
c) 36
d) 72
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
Maximization of return in the next five to ten years is the goal of which investment strategy?
a) strategic investing
b) initial investing
c) speculation
d) systematic investing
This type of risk is caused by the business cycle.
a) interest-rate risk
b) political risk
c) market risk
d) industry risk
All of the following are wise investment practices except
a) seek good investment advice.
b) keep good financial records.
c) define your financial goals.
d) make your decisions quickly to take advantage of the market.
A daily newspaper that provides detailed coverage of the business and financial world is
a) Barron's.
b) The Wall Street Journal.
c) Kiplinger's Personal Finance.
d) The Economist.
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) certified public accounts.
c) day traders.
d) discount traders.
Which of the following would be considered the lowest risk investment?
a) a stock
b) real estate
c) an annuity
d) a corporate bond
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) discount bond.
b) annuity.
c) option.
d) future.
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
An increase in the value of a stock over time is called a(n)
a) investment.
b) capital gain.
c) dividend.
d) yield.
A common stock
a) is less risky than preferred stock.
b) has no voting rights.
c) pays a fixed dividend.
d) allows stockholders to influence corporate policy.
Stocks in young, often small corporations that have higher overall risk than stocks of successful, long-established companies are called
a) growth stocks.
b) defensive stocks.
c) blue chip stocks.
d) emerging stocks.
The price for which a stock is bought and sold in the marketplace is called the
a) par value.
b) yield.
c) market value.
d) dividend.
Current Profit on Stock/Purchase Price + Commission=
a) Earnings per Share
b) Return on Investment
c) Net Yield
d) Interest Rate.
Which of the following is not a securities exchange?
a) NASDAQ
b) NYSE
c) AMEX
d) all of these are securities exchanges
Which of the following investment techniques would more likely be used by a day trader?
a) buying and hilding
b) dollar-cost averaging
c) buying on margin
d) reinvesting dividends
Using dividends previously earned on a stock to buy more shares is called
a) dividend reinvestment.
b) direct investment.
c) short selling.
d) preferred reinvestment.
The price of a share of stock divided by the corporation's earnings over the past 12 months is the
a) percent yield.
b) earnings per share.
c) ROI.
d) P/E ration.
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