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Exam 13: Investment Fundamentals

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Question 31

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Ownership investments are more vulnerable to deflation risk than lending investments.

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Question 32

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Four strategies of portfolio management for long-term investors are portfolio diversification,asset allocation,buy-and-hold,and​

A) ​dollar-cost averaging.
B) ​real return on investment.
C) ​market risk.
D) ​leverage.

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Question 33

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The real rate of return on a tax-free investment yielding 7 percent annually would be ____ percent if the investor were in the 35 percent marginal tax bracket and inflation were 4 percent.

Short-term investing requires more diligent monitoring than long-term investing.

Generally investments with high capital gains potential also pay high current income.

Investing goes beyond saving in that it​

Investment risk is the possibility that an investment may lose value.

In the leveraging process,your own money is used to make an investment with the goal of earning a rate of return in excess of the final selling price.

Use of leverage will increase the rate of return on a capital gain and also will increase the rate of loss on a capital loss.

____ investors primarily seek capital gains.

Portfolio diversification is the practice of selecting a collection of investments that have dissimilar risk-return characteristics.

____ is an example of an ownership investment.

Investment risk is speculative risk rather than pure risk.

Generally speaking,there is a trade-off between risk and rewards on investments.

You put your money into a 0.05 percent savings account.After two years you take your money out of the account,only to find that your purchasing power has decreased.This is an example of ____ risk.

Dividends are distributions of profits an investor receives for depositing funds in a bank or savings and loan association.

A passive investor carefully studies investment alternatives,regularly monitors them,and makes decisions to buy and sell with or without the advice of a professional.

Of the following investment alternatives,which is highest on the investment pyramid?​

You can accept ____ risk when investing for long-term goals.

A good investment program replaces one's savings program.