The stock market
Mike invested $2,562 in a company when the stock was $15.25 per share. If he sells that stock for $17.75 per share, what would be Mike's profit, to the nearest dollar?
$420
Joe worked all summer and saved $4,000. He wants to buy shares of XYZ Corporation, which is currently trading at $22.50 per share. How many shares can he buy if the stockbroker charges him $50 to execute the trade?
175
Maria has $25,000 to invest and wants to use 50% of the money to buy shares in Apple and 50% of the money to buy shares in Google. If Apple stock is $50 per share and Google stock is $600 per share, how many shares of each stock can she purchase?
250 shares of Apple and 20 shares of Google
Which would be an example of an investor taking a high-risk investment?
An average investor decides to put all of his or her money into one company's stock.
The idea that calculating risk needs to also include the intrinsic value of the risk is known as
Bernoulli's Hypothesis.
The following are electronic methods for buying and selling stock on the trading floor:
DOT and SOES.
Certificates of deposit, money market mutual funds, bonds, and annuities are examples of high-risk investments.
False
Conservative investors are risk-takers and put money into investments with unpredictable results.
False
Which of the following is a type of high-risk investment?
Hedge funds
The first entirely electronic stock market was the
NASDAQ.
Why are people closer to retirement generally more conservative investors than younger people?
People closer to retirement have a lower income potential.
Which high-risk investment has seen its value decreasing during the past five years?
Real estate
Which high-risk investment involves purchasing an asset with the intention of flipping it?
Real estate
The U.S. government agency that monitors the stock market is called the
SEC
Which of the following is taking the highest risk?
You spend $100 for the 1% chance to win back 10 times your money.
Avoiding hedge funds and other high-risk investments is
all of the above.
The first time a company offers shares of ownership for sale is known as
an IPO.
The NASDAQ and the NYSE are
both open to electronic trading
A __________________ is the form of business that issues shares of stock.
corporation
E-trading has ________________ the role of a financial broker.
diminished and changed
A hybrid market has both
electronic and floor trading.
Corporate bonds are issued by states, cities and counties to build schools, highways, and other projects.
false
FINRA is responsible for regulating securities firms overseas.
false
In order for corporations to raise money to expand their operations, they need the help of a stock broker to underwrite the stock offering.
false
Investment offers that make claims for high rates of return should be purchased without doing your homework.
false
Investments that involve high-pressure and force you to make a decision quickly are good offers to invest in.
false
Letters or e-mails from an unfamiliar sender outside the U.S. that ask you to make an investment are often sent with promises of money and prizes and you should do what they ask.
false
Money market mutual funds are long-term investments that offer tax-deferred growth by allowing you to deposit money and either take income immediately or leave the money invested.
false
Money market mutual funds are regulated by the government and are insured by the FDIC.
false
People generally receive lower interest rates for longer terms when they invest in certificates of deposit.
false
You should evaluate all investment offers after you have given the sender your credit card number
false
E-trading has ____________ the liquidity of financial markets.
increased
Different people react differently to a situation depending on how high the risk is. This is known as
investment risk tolerance.
E-trading has allowed __________ people to enter the financial marketplace.
more
The main purpose of the stock market is to
raise capital for corporations.
A type of broker called a _____________ handles a particular stock, or commodity, and she or he negotiates each sale.
specialist
Historically, stocks were bought and sold on a
trading floor.
Annuities are a popular way to save for retirement, but may not have as good a return as some other investments.
true
Bonds pay a specified amount of interest on a regular basis and you typically get back the original sum you loaned when the bond matures.
true
If you are offered a prize with any investment offers received through e-mail, you should be suspicious and delete them.
true
If you withdraw your money early from an annuity, you will have to pay a penalty.
true
Series EE Paper Bonds are bought at a discount of half their face value, so if you buy a bond worth $100, you only pay $50 for it
true
Shares of ownership in a corporation are called stocks.
true
Stocks are owned by both individuals and institutions.
true
The elderly may be susceptible to slick presentations and con artists.
true
You should get a prospectus for any investment offer to thoroughly understand the investment.
true
You should protect yourself and your computer from scams by using antivirus software.
true
You should report your suspicions of fraud to the Federal Bureau of Investigation and the Better Business Bureau.
true
When you buy stock in a company,
you own a small portion of the company.