Personal Finance Test 39 Multiple Choice
How many companies are in the Dow Jones Industrial average(DJIA)?
30
What does a stock represent?
A percentage of ownership of a company including assets and profits
What is an index ETF?
An ETF that tracks a stock index like the standard S and P 500
Who would be the most likely to buy in inverse ETF?
An investor who normally is not able to short sell in their portfolio
Who would be the least likely to buy a leveraged ETF?
An investor who thinks the underline index will slowly go up over time
General electric (GE) was the longest running member of the DJI from 1896 to 2018. Use the historical tab of the quotes tool, to find GE's opening stock price on December 31st 2014.
Between $25 and $26.99
What makes up a ticker symbol in the U.S.?
Between 1 and 5 LETTERS ONLY
What is the most common winning investment strategy for new beginners?
Buy what you know
What is the DJIA named after?
Charles Dow and his statistician Mr. Jones
Which of these is different between ETF's and mutual funds?
ETF's usually have lower fees than mutual funds
What should you look for when buying stock of a company you know?
If there stores are always busy
What is a danger of over-diversification?
If your investments are spread thin, it is hard to beat the market
What does it mean to diversify your portfolio? Why would you want to diversify between sectors?
In case a sector wide event causes all stocks to drop. (one answer for both)
Which is a characteristic of open-ended mutual funds?
Investors typically hold fractions of shares.
Why do investors pay close attention to income statements?
It is an accurate snapshot of a company's performance over a specific period of time.
Why do investors use financial statements when conducting fundamental analysis?
It lets investors compare directly apples to apples
Why did investors start using ticker symbols?
It was faster to move news using telegraphs with short names
How do you buy ETFS?
Like a stock, with the price constantly updating
If you choose a passive investment strategy how will your portfolio look with its first allocation?
Mostly ETF's of industries you think will grow
What is one difference between mutual funds and ETF'S?
Mutual funds cannot be day traded
What is a disadvantage of mutual funds?
Mutual funds have a maintenance fee regardless of fund performance.
What does the bottom line refer to?
Net income
Where did traders in New York originally meet?
Outside near a buttonwood tree
What is a good way to stay diversified?
Re-balance your portfolio every 3 months
Where were stocks first created?
Rome
Over the last 30 years, which investment produced the highest percentage of terms?
Stocks
What is preferred stock?
Stocks that gets paid dividends first
What was the biggest event leading to stocks being the most frequently traded security type on the exchange?
The industrial revolution
What does a stock quote represent?
The last price a seller or buyer agreed to make a trade
In the late 1800's, what factors led to the growth of the New York Stock Exchange?
The need for funds to finance new companies and build railroads
How can you find stock news about any company?
The quote page
Which of these items can you find in a stock quote?
The stocks' current daily volume
What is net change?
The total amount a stock's price has changed since the previous trading day
What does an income statement represent?
The total revenue and expenses a company used to do business over a period of time
What does it mean if a stock is near its resistance line?
The trend suggests the stocks' price will fall
Why would a stock have an "a" at the end of its ticker symbol?
There are multiple classes of stock for this company.
What is an IPO?
When a company first sells shares of stock to the public
Which is one major advantage of mutual funds?
You have a fund manager so you do not have to constantly monitor your investments.
What tools does the simulator have to help you choose stocks?
all of the above
Over the last 90 years, which investment produces the most volatile terms?
stocks
