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Which one of the following is false?


A) You can obtain recommendations to buy or sell stocks and other securities by accessing Internet sites.
B) There is a wealth of investment information available,but most small investors cannot afford to use it.
C) You can obtain current price information for stocks,bonds,and mutual funds by using the Internet.
D) A search engine is a research tool that helps you find the investment information you want.
E) Both government and businesses provide individuals with investment information.

Correct Answer

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Carl Reimer has just received an inheritance of $40,000 from his mother and is trying to decide how to invest it.Carl is young and earns a good salary.Carl wants to invest in a small cap mutual fund.While he won't receive much in the way of cash dividends,the companies are reinvesting significant amounts so the sales revenue and earnings in the future will be much larger.What aspect of investing is Carl most concerned about?


A) risk
B) return
C) diversification
D) liquidity
E) investment growth

Correct Answer

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If interest rates in the overall economy decrease,what will happen to the market value of a corporate bond with a fixed interest rate?


A) The bond will lose all its value.
B) The value of the bond will increase.
C) The value of the bond will decrease.
D) The value of the bond will not change.
E) It is impossible to determine if the bond's value will increase,decrease,or remain constant.

Correct Answer

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Which one of the following is a true statement?


A) It is not possible to overpay for real estate.
B) Location is the least important factor when making a real estate investment.
C) There are many factors to consider before investing in real estate.
D) There is no reason to evaluate a real estate investment because real estate always increases in value sooner or later.
E) Finding a buyer for a piece of real estate is always easy.

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Because of the age factor,most young investors tend to invest a large percentage of their nest egg in growth-oriented investments.

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Matt Jackson is single and 24.He has just graduated from college and obtained a job making $26,400 a year.Which one of the following investments would you recommend for his long-term investment program?


A) corporate bonds
B) government bonds
C) growth stocks
D) commodities
E) money-market fund

Correct Answer

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A firm is short on cash.Which of the following would be paid first?


A) dividends to common stock owners.
B) cash to buy shares of stock from shareholders.
C) cash to buy bonds from current bondholders.
D) interest to bond owners.
E) dividends to preferred stock owners.

Correct Answer

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Which one of these investments pools the funds of many investors and hires a professional money manager to manage those funds?


A) NOW account
B) securities exchange
C) certificate of deposit
D) mutual fund
E) stock option

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Equity capital is money:


A) obtained from the owners of a business.
B) borrowed through banks.
C) obtained by employee benefit programs.
D) that has to be repaiD.
E) that has been allocated to a retirement program.

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Based on historical performance,which one of the following investments is most apt to provide an average return of 10 percent a year between now and the year 2025?


A) U.S.Treasury bills
B) corporate bonds
C) stocks
D) options
E) zero-coupon bonds

Correct Answer

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Which of the following is a true statement?


A) A corporation generally obtains equity capital from bondholders.
B) A corporation must issue either preferred stock or common stock but not both.
C) When a corporation is experiencing financial problems,an investor should purchase common rather than preferred stock.
D) Most corporations sell options to satisfy a large part of their financing needs.
E) A stock split may not cause a stock's value to increasE.

Correct Answer

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Which one of the following is not a recommended step individuals can use to weather a future financial crisis?


A) establish a smaller than usual emergency fund
B) consider converting investments to cash to preserve value
C) contact banks and credit card companies if you are unable to make payments
D) pay off credit cards
E) seek cheaper alternatives to frequently purchased items

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Liquidity is the ease with which an asset can be converted to cash without a substantial loss in dollar value.

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A corporation must give each potential investor an annual report.

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Generally,options are conservative,long-term investment techniques.

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A speculative investment is an investment that is made in the hope of earning a relatively large profit over a long period of time.

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Bad products or poor corporate management may result in investors experiencing ______________ risk.


A) inflation
B) interest rate
C) business failure
D) systematic
E) income

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Which one of the following investments offers the greatest growth potential?


A) bank accounts
B) common stock
C) corporate bonds
D) government bonds
E) options

Correct Answer

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Allen Arnold earns $3,000 per month.He pays his mortgage,utilities,grocery and other bills and then he makes sure to set aside $150 for his savings and investment accounts before he spends money to go to movies and other personal expenses.Which suggestion for obtaining the money he needs for investing is he following?


A) paying himself first
B) taking advantage of employer-sponsored retirement programs
C) participating in an elective savings program
D) making a special effort once or twice a year to save
E) taking advantage of gifts,inheritance and other windfalls

Correct Answer

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Which one of the following investments offers the least amount of growth potential?


A) real estate
B) common stock
C) mutual funds
D) options
E) preferred stock

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