Chapter 11-Investing

Question 0

Use of savings to earn a financial return

Answer 0

Innvesting

Question 1

A rise in general level of prices

Answer 1

Inflation

Question 2

Professional investment planners

Answer 2

Financial advisers

Question 3

The spreading of risk among three types of investments

Answer 3

Diversification

Question 4

A formula used to estimate time or rate to double your money

Answer 4

Rule of 72

Question 5

Represents ownership in a corporation

Answer 5

Stock

Question 6

Debt obligations of corporations and government

Answer 6

Bonds

Question 7

Pools money of many investors and buys a large section of securities

Answer 7

Mutual funds

Question 8

Contracts to buy and sell commodities for a specified price on a specified future dates

Answer 8

Futures

Question 9

Low-priced stocks of small companies that have no track record

Answer 9

Penny stocks

Question 10

Buying assets with the hope of earning huge gains over a short period of time

Answer 10

Speculating

Question 11

A document that gives the financial history of a corporation

Answer 11

Annual report

Question 12

Government actions that affect business profits

Answer 12

Political risk

Question 13

A person who buys and sells securities for clients

Answer 13

Broker

Question 14

Sections of a newspaper containing financial data

Answer 14

Financial pages

Question 15

Provides financial data for interpretation

Answer 15

Discount

Question 16

Bond that is purchased for less than its maturity value

Answer 16

Discount bond

Question 17

The right, but not the obligation, to buy or sell a commodity or stock for a specified price within a specified time period

Answer 17

Option

Question 18

The chance that an investment’s will decrease

Answer 18

Risk

Question 19

A contract issued by an insurance company to pay you regular income

Answer 19

Annuity

Question 20

The put-and-take account is an emergency account

Answer 20

True

Question 21

Public corporations are not required to publish annual reports

Answer 21

False

Question 22

Market risk is caused by business declines or other events

Answer 22

True

Question 23

Political risk refers to the effect of higher interest rates when you are locked into lower rates

Answer 23

False

Question 24

An investor does not need to build trust with a financial adviser; it is important only to communicate goals clearly

Answer 24

False

Question 25

Investments that require more risk usually provide a greater potential returns

Answer 25

True

Question 26

An investment in real estate (owning your own home) is generally considered relatively safe but fairly illiquid

Answer 26

True

Question 27

An investment adviser is responsible for your decisions

Answer 27

False

Question 28

Beginning investments should include only long-range goals such as planning for retirement

Answer 28

False

Question 29

Forbes and Business Week are examples of financial magazines

Answer 29

True

Question 30

What is a risk associated with business decline

Answer 30

Market risk

Question 31

Permanent investments are generally made to provide for.....goals

Answer 31

Long-term

Question 32

How long are Treasury Bills issued

Answer 32

1year or less

Question 33

The final level or realm of investing is

Answer 33

Speculation

Question 34

What are factors in selecting an investment

Answer 34

Liquidity, growth value, and safety

Question 35

What is a high risk/high return investment

Answer 35

Stock

Question 36

What is the first step to wise investment

Answer 36

Define your financial goals

Question 37

Financial advisers should provide you with information about their

Answer 37

Fees

Question 38

What is a savings plan whereby an individual invests on a regular basis and planned basis

Answer 38

Systematic investment

Question 39

To find the most detailed data about a corporation, consult

Answer 39

An annual report