Chapter 11-Investing Flashcards

0
Q

Use of savings to earn a financial return

A

Innvesting

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1
Q

A rise in general level of prices

A

Inflation

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2
Q

Professional investment planners

A

Financial advisers

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3
Q

The spreading of risk among three types of investments

A

Diversification

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4
Q

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

A

Rule of 72

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5
Q

Represents ownership in a corporation

A

Stock

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6
Q

Debt obligations of corporations and government

A

Bonds

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7
Q

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

A

Mutual funds

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8
Q

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

A

Futures

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9
Q

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

A

Penny stocks

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10
Q

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

A

Speculating

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11
Q

A document that gives the financial history of a corporation

A

Annual report

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12
Q

Government actions that affect business profits

A

Political risk

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13
Q

A person who buys and sells securities for clients

A

Broker

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14
Q

Sections of a newspaper containing financial data

A

Financial pages

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15
Q

Provides financial data for interpretation

A

Discount

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16
Q

Bond that is purchased for less than its maturity value

A

Discount bond

17
Q

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

A

Option

18
Q

The chance that an investment’s will decrease

A

Risk

19
Q

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

A

Annuity

20
Q

The put-and-take account is an emergency account

A

True

21
Q

Public corporations are not required to publish annual reports

A

False

22
Q

Market risk is caused by business declines or other events

A

True

23
Q

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

A

False

24
Q

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

A

False

25
Q

Investments that require more risk usually provide a greater potential returns

A

True

26
Q

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

A

True

27
Q

An investment adviser is responsible for your decisions

A

False

28
Q

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

A

False

29
Q

Forbes and Business Week are examples of financial magazines

A

True

30
Q

What is a risk associated with business decline

A

Market risk

31
Q

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

A

Long-term

32
Q

How long are Treasury Bills issued

A

1year or less

33
Q

The final level or realm of investing is

A

Speculation

34
Q

What are factors in selecting an investment

A

Liquidity, growth value, and safety

35
Q

What is a high risk/high return investment

A

Stock

36
Q

What is the first step to wise investment

A

Define your financial goals

37
Q

Financial advisers should provide you with information about their

A

Fees

38
Q

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

A

Systematic investment

39
Q

To find the most detailed data about a corporation, consult

A

An annual report