Business

What is diversification from an investment perspective? What will be

QUESTION What is diversification from an investment perspective? What will be an ideal response?   ANSWER Answer: Diversification is owning a variety of different securities types in an investment portfolio. Following this approach means that a serious decline in the value of a particular security will not have a dramatic impact on the entire portfolio. […]

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Date: September 3rd, 2020

Which of the following lists investment strategies in order from lowes

QUESTION Which of the following lists investment strategies in order from lowest risk to highest risk? A) investing for growth < buying and holding < market timing < investing for income < value investing B) buying and holding < investing for income < investing for growth < value investing < market timing C) value investing […]

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Date: September 3rd, 2020

When the U.S. housing market recovers after the Great Recession and ho

QUESTION When the U.S. housing market recovers after the Great Recession and homes are being built at a rapid pace, this will have a direct impact on the price of which commodity? A) gold B) coffee beans C) appliances D) lumber E) gasoline   ANSWER Answer: D Explanation: D) In an economic expansion that is […]

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Date: September 3rd, 2020

Edna and Stan are both recently retired and need to reallocate their i

QUESTION Edna and Stan are both recently retired and need to reallocate their investments. Which of the following is the best portfolio mix to meet their needs? A) 75% growth stocks, 15% blue chip stocks, 10% bonds B) 50% growth stocks, 45% blue chip stocks, 5% cash C) 50% blue chip stocks, 25% bonds, 25% […]

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Date: September 3rd, 2020

Which portfolio mix is following the most aggressive investment strate

QUESTION Which portfolio mix is following the most aggressive investment strategy? A) 85% stocks, 15% bonds, 0% cash B) 50% stocks, 40% bonds, 10% cash C) 40% stocks, 35% bonds, 15% cash D) 0% stocks, 80% bonds, 20% cash E) 25% stocks, 65% bonds, 10% cash   ANSWER Answer: A Explanation: A) Stocks present much […]

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Date: September 3rd, 2020

Oliver is a day trader who tries to earn fast profits by making many t

QUESTION Oliver is a day trader who tries to earn fast profits by making many trades in a short amount of time. What investment strategy does Oliver follow? A) value investing B) market timing C) investing for growth D) buying and holding E) investing for income   ANSWER Answer: B Explanation: B) Market timing consists […]

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Date: September 3rd, 2020

In the securities market, what is a capital gain? What will be an ide

QUESTION In the securities market, what is a capital gain? What will be an ideal response?   ANSWER Answer: A capital gain occurs when an investor buys a security for a certain price and sells it at a higher price. The profit made from the sale is the capital gain. Explanation: Capital gain is the […]

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Date: September 3rd, 2020

Explain the difference between a stock and a bond. What will be an id

QUESTION Explain the difference between a stock and a bond. What will be an ideal response?   ANSWER Answer: A stock represents a share of ownership in a company. A bond is a certificate that shows the owner has lent money to a company or government agency. Explanation: Stocks represent shares of ownership in a […]

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Date: September 3rd, 2020