Question 1

Why would a 65-year-old likely be best served by owning an income stock rather than a growth stock?

Accepted Answer

Older people typically need fairly reliable sources of income and more stable stock prices; they get this with income stocks.Growth stocks have the potential for high appreciation,but they can also plummet in price,and they rarely pay significant dividends.

Question 2

A corporate bond that can be exchanged for stock is called a(n)________.

Accepted Answer

A)  debenture bond 
B)  secured bond 
C)  convertible bond 
D)  equity bond 
E)  IPO bond 
A)  debenture bond 
B)  secured bond 
C)  convertible bond 
D)  equity bond 
E)  IPO bond C

Question 3

Money market funds ________.

Accepted Answer

A)  are backed by the FDIC 
B)  are similar to corporate bonds 
C)  are very liquid 
D)  are risky investments 
E)  have lower interest rates than savings accounts 
A)  are backed by the FDIC 
B)  are similar to corporate bonds 
C)  are very liquid 
D)  are risky investments 
E)  have lower interest rates than savings accounts C

Question 4

What is the cheapest way for you to buy a stock?

Accepted Answer

A)  through a full-service stockbroker 
B)  through a discount broker 
C)  through your bank 
D)  through a New York Stock Exchange broker 
E)  through JP Morgan 
A)  through a full-service stockbroker 
B)  through a discount broker 
C)  through your bank 
D)  through a New York Stock Exchange broker 
E)  through JP Morgan

Question 5

An investor who wants a fairly reliable and large dividend would be best served by purchasing a(n)________.

Accepted Answer

A)  defensive stock 
B)  growth stock 
C)  blue chip stock 
D)  income stock 
E)  value stock 
A)  defensive stock 
B)  growth stock 
C)  blue chip stock 
D)  income stock 
E)  value stock

Question 6

The ________ is a formal legal document that provides details about an investment.

Accepted Answer

A)  prospectus 
B)  marketing plan 
C)  business section 
D)  dissertation 
E)  primary market report 
A)  prospectus 
B)  marketing plan 
C)  business section 
D)  dissertation 
E)  primary market report

Question 7

Describe two ways to make money by investing in stocks.

Accepted Answer

The two ways described in the

Question 8

Which of the following Standard & Poor's bond rating categories denotes the lowest risk?

Accepted Answer

A)  AAA 
B)  A 
C)  BBB 
D)  CCC 
E)  BB 
A)  AAA 
B)  A 
C)  BBB 
D)  CCC 
E)  BB

Question 9

The first time a company sells stock,it does so through an initial public offering.

Accepted Answer

A) True 
 B)False

Question 10

What are the four main advantages of mutual funds?

Accepted Answer

First,mutual funds allow an investor to

Question 11

A company issuing bonds is the same as a company getting a loan from an individual bank.

Accepted Answer

A) True 
 B)False

Question 12

What are the basic characteristics of a bull market and a bear market in terms of stock market performance and investor confidence?

Accepted Answer

A bear market includes both a

Question 13

Debenture bonds are safer than secured bonds.

Accepted Answer

A) True 
 B)False

Question 14

What factors can affect a person's risk tolerance,and how can risk tolerance change over time?

Accepted Answer

Personal psychological characteristics o

Question 15

What are the advantages and disadvantages to being a preferred stockholder as opposed to being a common stockholder?

Accepted Answer

Preferred stockholders don't get to vote

Question 16

Junk bonds ________.

Accepted Answer

A)  are paid with the highest interest rates 
B)  are typically rated in the A or B category 
C)  are relatively safe investments 
D)  are backed by insurance policies 
E)  are not attractive to any investors 
A)  are paid with the highest interest rates 
B)  are typically rated in the A or B category 
C)  are relatively safe investments 
D)  are backed by insurance policies 
E)  are not attractive to any investors

Question 17

The S&P 500 tracks more companies than does the DJIA.

Accepted Answer

A) True 
 B)False

Question 18

Discuss how a mutual fund mitigates risks for an investor and also saves him time.

Accepted Answer

Mutual funds allow investors to mitigate

Question 19

A retired person of modest means is best served by purchasing growth stocks.

Accepted Answer

A) True 
 B)False

Question 20

Both the New York Stock Exchange and the NASDAQ use only electronic methods for stock trading.

Accepted Answer

A) True 
 B)False

Exam 16: Investment Opportunities in the Securities Market

Why would a 65-year-old likely be best served by owning an income stock rather than a growth stock?

A corporate bond that can be exchanged for stock is called a(n)________.

Money market funds ________.

What is the cheapest way for you to buy a stock?

An investor who wants a fairly reliable and large dividend would be best served by purchasing a(n)________.

The ________ is a formal legal document that provides details about an investment.

Describe two ways to make money by investing in stocks.

Which of the following Standard & Poor's bond rating categories denotes the lowest risk?

The first time a company sells stock,it does so through an initial public offering.

What are the four main advantages of mutual funds?

A company issuing bonds is the same as a company getting a loan from an individual bank.

What are the basic characteristics of a bull market and a bear market in terms of stock market performance and investor confidence?

Debenture bonds are safer than secured bonds.

What factors can affect a person's risk tolerance,and how can risk tolerance change over time?

What are the advantages and disadvantages to being a preferred stockholder as opposed to being a common stockholder?

Junk bonds ________.

The S&P 500 tracks more companies than does the DJIA.

Discuss how a mutual fund mitigates risks for an investor and also saves him time.

A retired person of modest means is best served by purchasing growth stocks.

Both the New York Stock Exchange and the NASDAQ use only electronic methods for stock trading.

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