Investing Decisions

Based on the stock price​ model, what is the best prediction of what the price will do​ next?

• hold value

• keep increasing

• start decreasing

• no way to predict

The graph models the price per share of a stock.

What is the best prediction of where the price

will go next?

• a) The price will start decreasing.

• b) The price will start increasing.

• c) The price will hold its current value.

• d) The price can’t be predicted.

Zeke bought 10 shares of a​ company’s stock at a price of​ $21.20 per share. He now sees that the price per share of his investment is​ $32. His broker informs him that the price of the shares may see a decline in the future.

Zeke should ideally​ __________ the assets

• buy

• hold

• sell

Anita sees that the price per share of her current investment is much higher than the price at which

she purchased the shares. Her broker, however, thinks there’s a risk of a drop in the share price.

Should she BUY, SELL, or HOLD in this situation?

• BUY

• SELL

• HOLD

Which situation indicates that an investor​ shouldn’t sell his or her​ stocks?

• The price of the stock shows a negative​ trend, and the current stock price is lower than the​ investor’s purchase price.

• The price of the stock shows a negative​ trend, and the current stock price is higher than the​ investor’s purchase price.

• The price of the stock shows a positive​ trend, and the current stock price is lower than the​ investor’s purchase price.

• The price of the stock shows a positive​ trend, and the current stock price is the same as the​ investor’s purchase price.

Which statement describes the relationship between risk and​ return?

• Higher risk often leads to lower potential returns.

• Higher risk often leads to higher potential returns.

• Lower risk often leads to higher potential returns.

• Moderate risk often leads to the highest potential returns.

Which of the following investments has the highest risk and return​ potential?

• The stock of a large company with a long history of stable returns and dividends

• Rental real estate in a stable city with average economic growth

• a US treasury bond that matures in 6 months and pays​ 1.5% interest

• The stock of a small company with a wide range of price swings

Which statement comparing​ short- and​ long-term investments is​ true?

• Both offer a high degree of liquidity.

• Both have a minimum maturity period of five years.

• Both include​ stocks, bonds, and cash.

• Both have the same risk level and potential of returns.

High-risk investments​ __________ yield higher returns

• always

• sometimes

• never

Which of the following is a GOOD investing​ decision?

• Ryan invests only in the stock of companies he has complete faith in.

• Sanjay invests in companies in a variety of industries

• Silvia successfully avoids investing in unfamiliar foreign companies.