Series 7: Chapter 14

A recession is defined as a drop in GDP for:

2 quarters

Wilshire and S&P 500 are examples of what what type of index

Broad based indexes

Buying stocks with high PE ratios normally reflects which of the following investment styles?

Growth

The largest component of the S&P 500 index is made up of

Industrial stocks

A fund is investing capital raised from both institutional and private investors in a nonpublic company to assist the company with an anticipated acquisition. This type of investment would be known as

Private equity Private equity is equity capital invested in operating companies that are not publicly traded.

What term do economists use to describe a downturn in the economy that is characterized by both unemployment and rising prices?

Stagflation

The issuance of a debenture by a company would have an immediate effect on which of the following balance sheet items?

The total assets. The total liabilities. The working capital.

Which of the following balance sheet entries may be affected when a company pays a cash dividend?

Total assets. Total liabilities.

A small retail investor wants to invest in a growth development company. Which of the following should be of the most concern regarding suitability?

Whether the growth development company is traded or nontraded

Four of the best-known indexes and averages are listed below. How do they rank on the scale of MOST to fewest issues in the index?

Wilshire NYSE Composite Index Standard and Poor's 500 Dow Jones Industrial Average

Working capital is:

current assets - current liabilities.

Expansions in the business cycle are characterized by:

increasing consumer demand for goods and services, increasing industrial production, and rising stock markets and property values.

GDP includes

personal consumption, government spending, gross private investments, foreign investment, and net exports

Economic analysts are reporting that there is a general rise in prices for consumer goods and a high unemployment rate occurring simultaneously. This can best be described as

stagflation

A report by the federal government stating the Consumer Price Index (CPI) has increased by .3% indicates:

the cost of goods purchased by consumers increased, on average, .3% for the month.