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
