Investment Basics

Question 1

What is the investment fraud that uses organizations or relationships to promote its products?

Answer 1

Affinity Fraud

Question 2

What do you call a person’s willingness to weather changes in the values of his investments?

Answer 2

Risk tolerance

Question 3

Asset allocation is a long term investment technique and a form of diversification.

Answer 3

Yes. This strategy helps control risk.

Question 4

The process of selecting groups of investments with dissimilar risk/return characteristics.

Answer 4

Portfolio Diversification

Question 5

A method of systematically investing equal sums of money at regular intervals regardless of the price of the investment

Answer 5

Dollar-cost averaging

Question 6

What are the distributions of company profits paid to stockholders?

Answer 6

Dividends

Question 7

You would invest in Treasury securities if you had a very conservative investment risk tolerance. True or False

Answer 7

True

Question 8

Commissions are paid to individuals and companies for their services in buying or selling investments. Yes or No

Answer 8

Yes