Ch. 14 HW

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Dividends are usually paid by​ older, more established firms that​ have:

less potential for substantial growth.

Bonds are

long-term debt securities issued by government agencies or corporations.

Common stock is _____ and _____ than preferred stock

more volatile and more risky

The market value of a stock is determined​ by

multiplying the number of shares outstanding by the market price of the stock.

The most effective way to diversify your investments is to diversify among various types of investments that​ are

not equally sensitive to economic conditions

Coupon or dividend payments generated by a mutual​ fund's portfolio​ are

passed on to the individual investor

Mutual funds are managed by ________ for the individual investor

portfolio managers

Dividends are normally _________ distributions of the​ firm's earnings to the stockholders.

quarterly

Corporations sell stock in order​ to:

raise funds for expansion of their business operations.

Two terms that measure risk​ are:

range of return and standard deviation of the returns.

Real estate that can be rented generates income in the form​ of

rent payments

Mutual funds ______ and invest the proceeds in a portfolio of investments such as bonds or stocks

sell shares to individuals

The types of firms that are particularly risky​ are

smaller firms

The price of a stock changes each day in response to changes in​ the:

supply and demand for the stock in the secondary market.

The price of land is based​ on:

supply and demand in the land market.

The two main aspects that define risk concerning investments are​ uncertainty:

surrounding both the coupon payment and how the price of the investment will change.

Before making an IPO type of​ investment, individual investors must​ consider

that the​ long-term return on IPOs is weak compared to aggregate stock indexes

The market price of the stock depends​ on:

the number of investors willing to buy a stock versus the number of investors willing to sell.

The primary and secondary stock markets differ in which of the following​ aspects?

The primary stock market offers newly issued securities and the secondary stock market offers existing securities.

The​ return-risk trade-off​ is:

a higher return equates to a higher degree of uncertainty.

The disadvantage of investments that satisfy that priority​ is:

a relatively low return

Which one of the following is an example of a risk for real estate​ investments?

Tenants may miss several monthly payments.

Which of the following is not a common investment mistake made by​ individuals?

Filing for bankruptcy in order to salvage certain investments.

Which one of the following is an example of a​ high-risk return scenario for bonds in the event that the economy​ deteriorates?

Firms may be unable to pay its coupon payment

The types of stock investments are particularly tempting for stock investors​ are

IPOs

Day traders are investors​ who:

buy and sell stocks on the same day

If a mutual​ fund's shares decline over​ time, individual investors would have​ a

capitol loss

Stocks are financial instruments representing partial ownership in​ a:

corporation

Bonds can offer a return to investors in the form​ of:

coupon payments and bond price appreciation.

Investors want to measure risk to understand​ the

degree of uncertainty surrounding their future returns.

Shareholders can earn a return through

dividends or selling their stock at a price higher than the price they paid

Your first investing priority should be​ to

ensure adequate liquidity

Stocks with potential for substantial growth​ are:

growth stocks

Stocks are a common investment for those who believe that they will get​ a:

higher return from stocks than from other investments.

Some firms do not pay dividends but instead reinvest all the​ earnings:

in the firm's operations

Stocks that deliver large dividends​ are:

income stocks

Two types of investors​ are:

institutional investors and individual investors.


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