QUESTION Which investment strategy is least appropriate for an uninformed investor who wants to use a discount online broker? A) investing for income B) buying and holding C) investing for growth D) market timing E) value investing ANSWER Answer: D Explanation: D) Market timing may be the most difficult of all investment strategies. It […]
QUESTION The Helga’s Health board of directors feels the stock price for its Norwegian herbal supplements company has become too high and is pricing out potential investors. What action should the board take? A) lower the par value of its stock B) increase dividends to lower the market value C) issue a 2-for-1 stock split […]
QUESTION Which of the following has the LEAST influence on investors looking to buy stocks? A) book value B) dividends C) interest rate D) par value E) market value ANSWER Answer: D Explanation: D) Par value is the face value of a share of stock and is an arbitrary figure set by the issuing […]
QUESTION Traders on the floor of the American Stock Exchange sell securities for what types of businesses and based on what value? A) large, established U.S. companies; market value B) midsized growth companies; par value C) prominent high-tech firms; book value D) midsized growth companies; market value E) large, established U.S. companies; book value […]
QUESTION Which of the following would NOT be appropriate for the portfolio of someone practicing an investing-for-income strategy? A) preferred stocks B) municipal bonds C) corporate secured bonds D) bank certificates of deposit E) junk bonds ANSWER Answer: E Explanation: E) Junk bonds are considered highly speculative. The issuer could default and the investor […]
QUESTION Which of the following indicates the amount of debt a city takes on by issuing a particular bond? A) interest rate B) dividend C) yield D) denomination E) rating ANSWER Answer: D Explanation: D) Bonds are issued in denominations, in multiples of $1,000. A city that issues one $10,000 bond has taken on […]
QUESTION A conservative investor would buy bonds that receive which of the following Standard & Poor’s rating? A) AA B) BBB C) B D) CCC E) C ANSWER Answer: A Explanation: A) Bond ratings measure the quality and safety of a bond. The AA rating is Standard & Poor’s second highest rating: high quality. […]
QUESTION What do the Standard & Poor’s and Moody’s bond ratings provide an assessment of? A) book value B) risk C) dividends D) convertibility E) SEC compliance ANSWER Answer: B Explanation: B) Standard & Poor’s and Moody’s, the two principal rating services, issue bond ratings that reflect the issuer’s potential to default. A high […]
QUESTION All bonds have a maturity date at which the issuer must pay them off. What type of bond has two pay-off dates? A) sinking-fund bond B) serial bond C) prerefunded bond D) callable bond E) convertible bond ANSWER Answer: D Explanation: D) Issuers of callable bonds may specify a date before the full […]
QUESTION Mutual funds offer the opportunity for greater diversity of investment, so they present very little risk to clients. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Mutual funds include a diverse array of stocks, bonds, and other securities; however, they may focus on a particular industry sector or investment […]
