Chapter 6- Investing Test

which type of investment provides an individual with voting rights and receives dividends when declared by the company?

common stock

initial public offering

company's first sale of stock to the public

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

volatility

quick and unexpected changes in value or price

the _____ is the amount earned on an investment for a given period of time

rate of return

purchasing shares in a ______is a way to invest in real estate without the complications and financial commitment of owning property

real estate investing trust

a measure of the likelihood that something will be lost is _______

risk

a person's _____ tolerance varies depending on how much uncertainty he or she is willing to handle

risk

in which market do investors purchase securities from other investors rather than from the issuing company?

secondary

securities exchange

secondary market where securities are bought and sold through stockbrokers

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

preferred stock

stock that pays a regular dividend at a fixed rate

long-term investments with maturities of 30 years sold by the government are

treasury bonds

a _____ is a short-term security with maturities of two, three, five, seven, or ten years sold in increments of $100

treasury note

an investment's _____ is the amount of money earned on the investment, usually expresses as an annual percentage

yield

which of the following type of valuable goods can be considered an investment?

all of the above (gemstones, previous metals, and collectibles)

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

an increase in the value an investment is called____

appreciation

a _____ occurs when the selling price of an investment is less than the purchase price

capital loss

what is a certificate of debt issued by a corporation or government?

bond

an extended period of rising stock prices is a ______ market, while an extended period of falling stock prices is a _____ market

bull; bear

income that results from selling an asset for more than the purchase price is a______

capital gain

level of risk

degree to which an investment may deviate from its rate of return

Spreading risk by putting money in different types of investments is known as

diversification

investing a fixed dollar amount at regular intervals without regard to the price of the investment at the time you buy is ______

dollar-cost averaging

securities

financial assets issued by corporations, governments, and other organizations

an overall rise in prices is called____

inflation

a group of people who work together to learn about securities and to invest their period funds is an ______

investment club

prospectus

legal document that gives a detailed description of a security

the price at which an investment can be bought or sold at a given point in time is its _____

market value

a _____ is a type of mutual fund that deals only in interest-paying, short-term investments

money market mutual fund

which type of investment is created by pooling money of many people and investing it in a collection of securities?

mutual fund

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

net asset value

personal investment plan

outline of how to develop investment growth

a collection of investments a person has made is called an investment ______

portfolio

dividend

portion of a company's earnings that is paid to stockholders

in which market does a company's initial public offering (IPO) occur?

primary