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Exam 11: Investment Basics

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Question 151

Multiple Choice

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Bruce Lee owns stocks,bonds,real estate,gold coins,T-Bills,and gemstones.He has a(n)

A) equity portfolio.
B) default-proof portfolio.
C) inflation-proof portfolio.
D) diverse portfolio.
E) risk adverse portfolio.

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Question 152

True/False

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When placing a market order to purchase shares of stock,you will be required to make the order good-till-canceled.

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Question 153

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What is the purpose of a circuit breaker for the market?

An option gives you the right to buy or sell the underlying asset at a set price on or before the option's maturity date.

You purchased some stock last month for $50 per share.Today the stock closed at $80 per share.You would like to protect the profit that you have made on this stock but you really don't want to sell it in case it continues to rise in price.What should you do?

Market risk deals with the inability to sell a security quickly at fair market value.

Petrina was told by a successful friend to invest in stocks and income-producing real estate.Both of these are examples of ________ investments.

What type of investment would have a high risk premium associated with political and regulatory risk?

Tran purchased a house for a rental property for $100,000 five years ago.During the time he owned this rental,his net rental income was a total of $4,000.He just sold the property for $120,000.What was his average annual return on this investment?

When trading there are "round trip" costs in that you will pay costs when you buy securities and when you sell securities.

If you earned a negative 5% return on your investments while the overall stock market was down 9% then you have outperformed the market.

Risk capacity refers to the strength of your financial safety net.

The real rate of return is the nominal rate of return adjusted for inflation.

Differentiate between primary and secondary security markets.

How do interest rates affect returns on other investments?

Our study of efficient markets tells us all of the following about investing except

Full service brokers are legally obligated to analyze the recommendations they receive from analysts.

Compare and contrast lending and ownership investments.

Long term capital gains are taxed at ________ percent.

A group of 100 shares of common stock is referred to as a(n)