3.04 Test Review

A company that Marcus invested in has earned a profit, and now he is receiving a cash payment. This is an illustration of:

• dividends.

• a stock split.

• a stock exchange.

• capital appreciation.

Robyn bought $100 worth of stock in a company, and the stock is now worth $150. This is an illustration of:

• capital appreciation.

• dividends.

• a stock split.

• a stock exchange.

A mutual fund that has no limit on the number of shares it can issue or the amount of money it can hold is called a/an:

• stock fund.

• growth fund.

• open-end fund.

• closed-end fund.

Teri decided to invest in a few different mutual funds rather than put all her investment dollars into one or two individual stocks. A stock in one of her mutual funds became worthless, but since her investment was spread out, Teri was only slightly affected. What advantage of mutual funds does Teri's situation illustrate?

• liquidity

• convenience

• diversification

• professional money management

Which type of stock comes with voting rights?

• Income

• Common

• Preferred

• Small cap

Which is considered a reliable bond?

• Junk bond

• Investment-grade bond

• High-yield bond

• Convertible bond

Which best describes a marketable bond?

• one that is bought and sold in the open market

• one that later becomes a stock at a market

• one that

• one that is only traded privately

Mutual funds that contain both stocks and bonds are known as:

• exchange-traded funds.

• money market funds.

• balanced funds.

• index funds.

A place where investors can trade securities that have been issued by a corporation is known as a/an:

• primary market.

• secondary market.

• stock market index.

• initial public offering.

Kent wants to learn as much as possible about the mutual fund that he is considering as an investment. Which is the best place he could go for detailed information?

• newspaper

• trade magazine

• social media

• television