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Exam 11: Investment Basics

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Question 81

Multiple Choice

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You just concluded a stock purchase transaction via a computer hookup rather than in an organized exchange.This trade took place in the

A) over-the-counter market.
B) NYSE.
C) AMEX.
D) primary market.
E) none of the above.

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Question 82

True/False

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As the owner of a corporate bond this means I hold an ownership position within that corporation.

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Question 83

Multiple Choice

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Jennifer has money invested in stocks.She earns a return on her investment,which is a portion of the company's profits,called

Market risk is the risk of fluctuations in security prices due to changes in the market interest rate.

An investor owns stock from seven different companies,two rental houses,and three government bonds.Together these assets are considered to be the investor's

What is an advantage to being a "preferred" stock holder?

Patti DeVry has been trading stocks in the over-the-counter market.When she wants to sell her stocks she will specify the ________ price and when she wants to purchase stocks she will specify the ________ price.

The primary sources of information about the stock market and individual stocks are Moody's Investors Service,Standard & Poor's Stock Reports,Morningstar Investment Reports,and the Value Line Investment Survey.

According to the Keown book,overconfidence afflicts women more often than men,and it also leads women to trade too often.

A ________ is an order to buy or sell a set number of securities immediately at the best price available.

The disposition effect involves

Barney Hopkins is the financial manager for Amax Corporation.He knows that ________ risk deals with good or bad management decisions and ________ is associated with his company's use of debt.

Reggie believed that the price of his stock was going to drop in the near future his strategy was to short sell that stock to make a profit.

In addition to your own investment,you borrowed money from your broker to purchase shares of a stock.Your broker called to tell you that the price of your stock has fallen and you now need to contribute more of your own money to keep the account at the minimum level.This is termed a(n)

Diversification eliminates all the risk from your portfolio.

You and your spouse have decided to incorporate bonds into your newly-formed retirement portfolio.You will most likely purchase them

If you purchases securities jointly with another person,how the account is registered is not very important.

An ask on offer price is one at which an individual is willing to sell a security.

Merrill Lynch,Edward Jones and Morgan Stanley Smith Barney are all full service brokers.

Investing in bonds tends to be riskier financial strategy than investing in common stocks.