69 Finance questions true or false
1. Investing is considered a short-term activity that involves the buying and selling of securities.
2. Investing and speculating are two entirely different activities.
3. Mutual funds provide professional management and diversification that individual investors - especially those with limited resources - can rarely obtain on their own.
4. A systematic investment routine involves investing similar sums in regular intervals.
5. When completed, an investment plan is a way of translating an abstract investment target into a specific investment program.
6. The term "investment' refers to money placed in some medium where value and level of return are totally unpredictable.
7. Two prerequisites to investing are above average risk and clear understanding of market direction.
8. A statement specifying how investment capital will be invested in order to reach targeted goals is called a marketing plan.
9. Your goals tend to set the tone for your investment program, and they play a major role in determining how conservative or aggressive you're likely to be in making investment decisions.
10. The major reason most people invest is to shelter current income from taxes.
11. Owning common stock represents a debt investment.
12. Common stock pays interest payments on a quarterly basis.
13. Common stock generally allows the stockholder to vote on issues of corporate governance.
14. Long-term securities are traded in the primary market.
15. Newly issued securities are sold to the public in the secondary market.
16. A prospectus describes the firm and the issue of a new security.
17. An individual is more likely to use the secondary markets than the primary market.
18. Listed securities are traded on organized exchanges.
19. If a company's shares are traded on the New York Stock Exchange, the company is a member of the exchange.
20. Preferred stocks are the common stocks of ultra blue-chip companies.
21. Preferred stock combines the fixed income features of bonds with the same price appreciation potential as common stocks.
22. Mutual funds often sell directly to investors.
23. A retail stockbroker buys and sells securities on behalf of clients.
24. The Securities Investor Protection Corporation insurance guarantees the dollar value of your securities will not dip below a certain level.
25. A round lot consists of multiples of 100 shares of stock.
26. A sale of 450 shares of stock would involve the trade of an odd lot.
27. All OTC stocks are part of NASDAQ.
28. The over-the-counter market is not an organized security exchange.
29. The bid price would be the price paid by an investor for an OTC stock.
30. NASDAQ is now the second largest securities market in the U.S.
31. The federal government regulates securities markets through the Securities and Exchange Commission.
32. Prices are rising in bear markets, indicating economic optimism.
33. When a brokerage house holds your securities for you, they hold them in a street name.
34. According to recent legislation, under the FDIC each brokerage account is insured up to $250,000.
35. An odd lot transaction is generally more expensive than a round lot transaction.
36. There are 50 shares in a round lot.
37. Brokers charge a commission on security purchases as well as on security sales.
38. Discount brokers discount the price of securities to below the prevailing market price.
39. A market order to sell would be filled at the highest price available that day.
40. A limit order may be used either to buy or to sell.
41. Buying on margin would allow you to purchase securities using borrowed funds.
42. The Securities and Exchange Commission sets margin requirements on security purchases.
43. The Federal Reserve Board (Fed) has the power to raise and lower the margin requirements for stock purchases.
44. A short sale transaction will be profitable when prices are falling.
45. The federal margin requirement for common stock is 50%.
46. Trading on margin can magnify losses or profits.
47. A corporation's annual stockholders' report provides financial data and other information related to both past and planned activities.
48. The most popular average/index covering stocks listed on the New York Stock Exchange is the New York Stock Exchange Index.
49. The Standard and Poor's Index includes 30 industrial stocks.
50. Stockbrokerage firms often do industry analysis.
51. On-line trading is the only valuable investment service available through the Internet.
52. An annual stockholder report will contain audited financial statements of the company.
53. The NYSE index includes all stocks listed on the "Big Board."
54. The first step in asset allocation is selecting the securities that should go into your portfolio.
55. A portfolio is a collection of investment assets assembled to meet your investment objectives.
56. A diversified portfolio should be less risky than putting your money into a single security.
57. Diversification increases risk.
58. A retired couple can probably bear more risk in their portfolio than a young investor with a secure job.
59. There is a trade-off between earning a high current income from an investment and obtaining significant capital appreciation from it.
60. Once one's asset allocation plan is developed and securities are selected, these decisions do not have to be made again until there is a major life change.
61. A portfolio is a collection of investment vehicles assembled to meet an investment goal.
62. The total return of a portfolio is influenced far more by specific security selection than asset allocation.
63. Portfolio rebalancing refers to buying and selling activities intended to return a portfolio to its target allocation levels.
64. The single most important reason for investing is for retirement.
65. NYSE Euronext is a part of the broker market accounting for 40% percent of global transactions.
66. The Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 included several reforms aimed at reforming banks and insurance companies.
67. In terms of market capitalization, Apple is the biggest company in the world.
68. Retired people often choose investments offering high current income with high risk.
69. Exchange traded notes face both market risk and the risk of the issuing bank defaulting.