Chapter 10 Test Review

When savings accumulate beyond what may be needed for short-term goals and emergencies, then you have money available for investing.

• True

• False

When gambling, your chances of winning are much less than 50 percent.

• True

• False

Liquidity is a term used to describe how quickly your money can trickle away to nothing if you fail to meet your savings and investment goals.

• True

• False

When you are saving money, the most important consideration is safety of principal.

• True

• False

Using the strategy of dollar-cost averaging relieves the investor of having to study the stock market to try and determine the best time to buy stocks.

• True

• False

In general, the greater the potential return, the higher the risk.

• True

• False

A bear market exists when stock prices are consistently rising.

• True

• False

Experts recommend setting aside one to two years' net pay in an emergency fund.

• True

• False

When a company’s overseas factory is destroyed during protests and rioting, this is an example of

• inflation risk

• industry risk

• political risk

• company risk

Owning stock in a lumber mill during a decline in home construction is an example of

• inflation risk

• industry risk

• political risk

• company risk