Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | bear market | f. | investment | b. | bull
market | g. | par
value | c. | capital gain | h. | portfolio | d. | equities | i. | prospectus | e. | financial
asset | j. | yield |
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1.
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an investment report to potential investors
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2.
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the use of assets to earn income or profits
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3.
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amount paid to purchase a bond that will be repaid at maturity
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4.
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the annual rate of return on a bond if the bond were held to maturity
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5.
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claim on the property or income of a borrower
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6.
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claims of ownership in a corporation
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7.
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the difference between a higher selling price and a lower purchase price,
resulting in a financial gain for the seller
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8.
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a steady drop in the price of stocks over a period of time
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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9.
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All of the following are examples of financial intermediaries EXCEPT
a. | a credit union. | c. | a finance company. | b. | a stock certificate. | d. | a life insurance
company. |
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10.
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The main advantage of diversification as an investment policy is that it
a. | reduces risk to investors. | b. | increases investors’ access to their
money. | c. | offsets the effects of inflation on investments. | d. | guarantees a fixed
rate of return on an investment. |
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11.
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An accurate statement about bonds would be that
a. | they are insured by the FDIC. | b. | they are generally held for 3 or 6
months. | c. | they are usually a low-risk investment. | d. | they entitle the
holder to a share of ownership in a corporation. |
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12.
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The interest rate the bond issuer pays to the bondholder is called the
a. | coupon rate. | c. | discount rate. | b. | maturity rate. | d. | value rate. |
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13.
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Savings bonds differ from most other bonds in that
a. | they provide a higher rate of return. | b. | they are held for a shorter
time. | c. | the buyer does not receive periodic interest payments in exchange for a lower
purchase price. | d. | they are issued in fairly large denominations in exchange for a lower purchase
price. |
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14.
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To finance the building of a new police station, a local government is most
likely to issue a
a. | junk bond. | c. | municipal bond. | b. | treasury bond. | d. | money market
bond. |
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15.
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Investing in a money market mutual fund is a higher risk than investing in a
certificate of deposit because unlike CDs, money market funds
a. | are not insured by the FDIC. | b. | are not protected by the Securities and
Exchange Commission. | c. | do not earn a fixed interest
rate. | d. | must be held for a preset amount of time. |
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16.
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An example of equity is
a. | a treasury bond. | c. | a treasury bill. | b. | a share of stock. | d. | a long-term certificate of
deposit. |
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17.
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An example of blue chip stock might be
a. | a new start-up firm. | b. | a foreign-owned company that operates in
another country. | c. | an established company that is traded over the Internet. | d. | a large, well-known
company traded on the NYSE. |
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18.
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The Dow Jones Industrial Average consists of
a. | 500 different stocks that change annually. | b. | 30 stocks that are
considered representative of the market as a whole. | c. | the top-selling 250 stocks over a 10-year
period. | d. | 60 stocks selected from the NYSE, the NASDAQ-AMEX, and the OTC
market. |
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Short Answer
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Interpreting a Newspaper Stock Report52
weeks | | | |
Yld
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Vol
| | | | Net
Change | Hi | Lo | Stock | Sym | Div | % | PE | 100s | Hi | Lo | Close | | 40.38 | 22.50 | Disney | DIS | 0.21 | .70 | 40.00 | 74244.00 | 30.56 | 29.69 | 29.75 | -0.25 | 52.56 | 26.94 | Dolefood | DOL | .40 | 1.30 | 72.00 | 2927.00 | 31.75 | 31.38 | 31.63 | 0.44 | 22.75 | 12.88 | DominRes | DOM | 2.56 | 15.80 | -- | 288.00 | 16.19 | 15.88 | 16.19 | 0.13 | 16.50 | 5.06 | DonnaKm | DK | | -- | | 1283.00 | 9.88 | 8.88 | 9.88 | 0.88 | 22.38 | 12.13 | DonnelyA | DON | .40 | 2.90 | 21.00 | 270.00 | 13.75 | 13.25 | 13.75 | 0.56 | 136.88 | 74.69 | DowChem | DOW | 3.48 | 2.50 | 25.00 | 13513.00 | 138.00 | 132.38 | 136.94 | 3.38 | | | | | | | | | | | | |
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19.
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Which stock listed on the chart above increased in value the most on this
trading day?
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20.
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Which of the stocks listed on the chart has the highest yield to date?
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21.
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Which stock would cost you the most to buy at the end of this trading
day?
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22.
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What is the number of shares of DonnelyA stock that were traded on this
day?
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Essay
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Critical Thinking
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23.
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Making Comparisons Explain the differences between daytrading and other
types of stock trading. Discuss the pros and cons of each.
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24.
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Analyzing Information What, in your opinion, are some of the lessons that
should be learned from the Great Crash?
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