Investment Knowledge Quiz

A woman wants to buy an investment that will pay a fixed dividend, providing a source of steady retirement income. Which investment product best meets her needs?

• Preferred stock

• Speculative stock

• Common stock

• Capital growth stock

An example of diversification is investing in:

• Blue-chip stocks

• Speculative stocks

• Corporate bonds

• Four different types of investment products

Which type of investment is best protected from an increase in inflation?

• A 25-year corporate bond supporting medical research

• A certificate of deposit

• A new car

• A house financed with a fixed-interest-rate mortgage

A true statement about corporate bonds is that they are:

• Issued by the Securities and Exchange Commission (SEC)

• Loans given by the investor to the issuing corporation

• Paid at maturity for less than the face value

• Loans given by the investor with ownership privileges in the corporation

A person owns common stock, a corporate bond, shares in two mutual funds, and a US Treasury note. All of these together are called a/an:

• Pension

• Net worth

• Investment portfolio

• Investment package

A person bought 200 shares of General Electric at $18 per share. She sold them for $28 per share realizing a:

• Capital gain of $2,800

• Capital loss of $2,000

• Capital gain of $2,000

• Capital loss of $2,800

The total number of shares held by all shareholders in a company is called the:

• Treasury shares

• Dividend shares

• Outstanding shares

• Company shares

When stocks have high price/earning ratios (P/E), it usually means that investors are:

• expecting high future growth

• concerned about the company's stability

• looking for dividend income

• avoiding the stock

A person who is anticipating higher growth in the future is:

• Risk averse

• Expecting no earnings

• Anticipating higher growth in the future

• Anticipating lower growth in the future

A person owns a corporate ten-year bond with a face value of $1,000 paying 5% in annual interest. At maturity, the person can cash the bond for:

• $1,000 plus the last interest payment on the ten-year bond

• $1,000 less interest paid over the ten-year term of the bond

• $1,000

• $1,000 plus inflation