Ch. 14 HW
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.
