S&I Fall EOS

The possibility that an investment will fail to pay the expected return or fail to pay a return at all is called:

• savings risk

• spending risk

• investment risk

• systemic risk

Shares of ownership in a company are called bonds.

• true

• false

Answer explanation

Shares of ownership in a company are called STOCKS.

When a company is doing well it may distribute the profits to its shareholders in the form of:

• dividends

• stocks

• bonds

• mutual funds

Dividends can be paid in cash or with additional shares

• true

• false

To help diversify their portfolio, an investor may choose to invest in a mutual fund which combines the funds of many different investors into a combination portfolio of stocks and bonds.

• true

• false

The type of investment where you lend money to a company or a government is called a

• stock

• bond

• mutual fund

• derivative

Funds are provided to the INITIAL issuer of securities in the SECONDARY market.

• True

• False

Answer explanation

Funds are provided to the initial issuer of securities in the primary market.

The Securities Act of 1933 was for this purpose:

• Declared trading strategies to manipulate the prices of public secondary securities illegal

• required complete disclosure of relevant financial information for publicly offered securities in the PRIMARY market. 

• imposed heavy penalties for insider trading

• required complete disclosure of relevant financial information for securities traded in the SECONDARY market.

Which of these is NOT a depository institution?

• Credit Union

• Commercial Bank

• A finance company

• Savings Institutions

An example of a debt security is a bond.

• true

• false

Answer explanation

debt securities represent borrowed funds incurred by the issuer.