Investment Management Summative

What is the term for a stock that pays regular dividends and is considered a stable investment with lower risk?

• Growth stock

• Value stock

• Income stock

• Penny stock

Which financial ratio is often used to evaluate a company's profitability and is calculated as net income divided by total shareholders' equity?

• Price-to-Earnings (P/E) ratio

• Return on Investment (ROI)

• Earnings per Share (EPS)

• Return on Equity (ROE)

What is the term for a sudden and significant drop in the overall stock market, often resulting in panic selling?

• Bull market

• Bear market

• Crash

• Correction

What is the role of a stockbroker in the stock market?

• To manufacture stocks

• To regulate stock trading

• To facilitate the buying and selling of stocks on behalf of investors

• To audit financial statements of publicly traded companies

What term describes the practice of buying a stock with borrowed money, hoping that the price will rise and allow the investor to profit?

• Short selling

• Margin trading

• Dividend investing

• Dollar-cost averaging

What is the primary risk associated with holding long-term bonds when interest rates rise?

• Inflation risk

• Credit risk

• Liquidity risk

• Interest rate risk

Which type of bond is issued by the U.S. government and is considered one of the safest investments due to its full faith and credit backing?

• Corporate bond

• Municipal bond

• Treasury bond

• Junk bond

What is a bond rating agency responsible for?

• Managing stock market indices

• Regulating bond markets

• Assigning credit ratings to bonds to assess their creditworthiness

• Administering government bonds

What term is used to describe a bond that has reached its maturity date, and the issuer repays the principal amount to bondholders?

• Callable bond

• Convertible bond

• Matured bond

• Redeemed bond

What is the term for an investment strategy that involves buying a diversified portfolio of stocks and holding them for the long term without frequent trading?

• Day trading

• Swing trading

• Value investing

• Buy and hold