Choose the word or phrase in [ ] which will correctly complete the statement. Se
Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
1. [Speculating | Investing] is considered to be a long term activity.
2. [Investing | Speculating] is viewed as a short-term activity that involves the buying and selling of securities in which future value and expected return are highly uncertain.
3. Before you start investing, you should plan to have a minimum of [$1,000 | $15,000] available.
4. The first thing you need to determine in order to reach an investment goal is the [rate of return you can receive | the amount of money you need to set aside periodically].
5. [Depositing a lump sum and letting it grow | Making monthly deposits to your investment] would be the least costly way to reach a financial goal.
6. An investment offering a high current income would likely be more desirable for [a young couple | a retired couple].
7. Ownership in a corporation would be represented by [stock | bonds].
8. The owner of a bond would expect to receive [steady | variable] annual income.
9. [Common stocks | Bonds] have no maturity date.
10. A fixed dividend would be received with [common | preferred] stock.
11. A convertible bond would let the investor exchange it for [preferred | common] stock.
12. Short term securities are traded in the [money | capital] market.
13. The issuer of the security would get no money from a trade in the [primary | secondary] market.
14. The [primary | secondary] market is where new securities are sold to the public.
15. An IPO is be sold in the [primary | secondary] market many times.
16. A(n) [underwriting | prospectus] is a document made available to prospective security buyers that describes the firm and a new security issue.
17. A [broker | investor] can be a member of a "syndicate" when taking orders for a new IPO.
18. The [broker | dealer] market is made up of both the NASDAQ market and the OTC market.
19. Listed securities would be purchased from [a securities exchange | the over the counter market].
20. The [bid | ask] price for a stock sold on the OTC market represents the price you would receive when you sold the stock.
21. The majority of the securities laws were enacted [before | after] 1930.
22. The Securities and Exchange Commission was established as a result of the [Securities Act of 1933 | Securities Exchange Act of 1934].
23. A [bull | bear] market is characterized by falling stock prices.
24. A [bull | bear] market is characterized by rising stock prices.
25. Stockbrokers prefer clients who [buy and hold | trade actively.]
26. A deep discount broker will execute orders as well as [pick the stocks for you to buy | provide extensive information about various securities | offer little to no other services].
27. The Securities Investors Protection Corporation would make payment to you if [the corporation in which you bought stock | the brokerage firm holding your stock] went bankrupt.
28. Most brokerage agreements [will | will not] permit you to sue your broker for malpractice.
29. Fifty shares of stock would constitute [an odd lot | a round lot].
30. Two hundred shares of stock would constitute [an odd lot | a round lot].
31. On a percentage basis, commissions will be higher if you are buying a [large | small] number of shares.
32. Brokerage commissions on [stock | bond] transactions are likely to be a flat fee per unit.
33. An order to buy or sell a security at the best price available at the time the order is received is a [market | limit] order.
34. If you want to set a specific price in your order, you will use a [market | limit] order.
35. You are going to buy stock on margin. You will be required to put up a minimum of [50 | 60] percent of the money needed to make the purchase.
36. Margin requirements are set by the [SEC | Federal Reserve].
37. Using margin will magnify [only gains | only losses | gains and losses].
38. You are selling short; you anticipate the price of the stock will [rise | fall].
39. When you sell short, the proceeds of the sale will be [held until the sale is covered | given to you immediately after the sale].
40. The maximum amount of money you could lose in a short sale is [known | unknown] at the time of the transaction.
41. Publicly traded corporations [are required to | may choose to] provide annual reports to their stockholders.
42. The Dow Jones Industrial Average is based on [all stocks traded on the NYSE | 50 large stocks | 30 large stocks].
43. The [DJIA | S&P Index] is based on 500 different stocks.