Securities Ch 6

bond

What is a certificate of debt issued by a corporation or government? A. stock B. bond C. mutual fund D. Dividend

All of the above

Which of the following type of valuable goods can be considered an investment? A. gemstones B. previous metals C. collectibles D. All of the above.

mutual fund

Which type of investment is created by pooling the money of many people and investing it in a collection of securities? A. common stock B. mutual fund C. corporate bond D. investment club

common stock

Which type of investment provides an individual with voting rights and receives dividends when declared by the company? A. common stock B. mutual fund C. preferred stock D. Bond

rate of return

The __ is the amount earned on an investment for a given period of time.

initial public offering (IPO)

Company's first sale of stock to the public.

level of risk

Degree to which an investment may deviate from its rate of return.

securities

Financial assets issued by corporations, governments, and other organizations.

secondary

In which market do investors purchase securities from other investors rather than from the issuing company? A. primary B. secondary C. IPO D. new-issues

primary

In which market does a company's initial public offering (IPO) occur? A. primary B. secondary C. OTC D. investment club

capital gain

Income that results from selling an asset for more than the purchase price is a(n) __.

stock

Share in the ownership of a corporation.

Treasury bill (T-bill)

Short-term debt with maturities ranging from a few days to 52 weeks.

diversification

Spreading risk by putting money in different types of investments is known as _. A. dollar-cost averaging B. diversification C. risk tolerance D. variation

preferred stock

Stock that pays a regular dividend at a fixed rate.

yield

An investment's __ is the amount of money earned on the investment, usually expressed as an annual percentage.

Inflation

An overall rise in prices is called _. A. a yield B. volatility C. a dividend D. Inflation

portfolio

A collection of investments a person has made is called an investment __.

investment club

A group of people who work together to learn about securities and to invest their pooled funds is a(n) __.

risk

A measure of the likelihood that something will be lost is _.

net asset value (NAV)

A mutual fund's _ is the total of its assets minus its liabilities divided by the number of shares the fund has outstanding.

risk

A person's __ tolerance varies depending on how much uncertainty he or she is willing to handle.

treasury note (T-note)

A(n) __ is a short-term security with maturities of two, three, five, seven, or ten years sold in increments of $100.

money market mutual fund

A(n) __ is a type of mutual fund that deals only in interest-paying, short-term investments.

capital loss

A(n) __ occurs when the selling price of an investment is less than the purchase price.

dividend reinvestment plan (DRIP)

Allows investors to reinvest cash dividends by purchasing additional shares of stock.

risk tolerance

Amount of uncertainty a person is willing to handle.

bull, bear

An extended period of rising stock prices is a __ market, while an extended period of falling stock prices is a __ market.

appreciation

An increase in the value of an investment is called _. A. inflation B. net asset value (NAV) C. appreciation D. Yield

dollar-cost averaging

Investing a fixed dollar amount at regular intervals without regard to the price of the investment at the time you buy it is _. A. dollar-cost averaging B. buy-and-hold investing C. a dividend reinvestment plan D. net asset value investing

prospectus

Legal document that gives a detailed description of a security.

Treasury Bond (T-bond)

Long-term investments with maturities of 30 years sold by the government are __.

personal investment plan

Outline of how to develop investment growth.

dividend

Portion of a company's earnings that is paid to stockholders.

stock trade

Purchase or sale of shares of stock.

investing

Purchasing a financial product or valuable item with the goal of increasing wealth over time in spite of possible loss.

real estate investment trust (REIT)

Purchasing shares in a(n) __ is a way to invest in real estate without the complications and financial commitment of owning property.

volatility

Quick and unexpected changes in value or price.

securities exchange

Secondary market where securities are bought and sold through stockbrokers.

market value

The price at which an investment can be bought or sold at a given point in time is its __.