Tips and Tools For Financial Success - Newton Free Library
Tips and Tools For Financial Success - Newton Free Library
Tips and Tools For Financial Success - Newton Free Library
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Investing Quiz – Answers<br />
1. Correct Answer: d. All of the above<br />
Although people have differing risk levels, all of these investments are commonly bought.<br />
2. Correct Answer: d. Common <strong>and</strong> Preferred<br />
Common stock represents ownership in a corporation. Dividends paid on common stock fluctuate<br />
with the profitability of the company. Preferred stock is an equity investment that typically pays a<br />
fixed dividend on a regular schedule. Roth <strong>and</strong> 401K refer to retirement accounts. St<strong>and</strong>ard <strong>and</strong><br />
Poor’s is a rating service.<br />
3. Correct Answer: a. Buying stocks, bonds <strong>and</strong> certificates of deposits<br />
Diversification specifically refers to having several different kinds of securities in an investment<br />
portfolio.<br />
4. Correct Answer: c. A junk bond<br />
A junk bond is considered a risky investment <strong>and</strong> carries a lower rating.<br />
5. Correct Answer: b. FDIC<br />
The FDIC st<strong>and</strong>s for the Federal Deposit Insurance Corporation <strong>and</strong> insures bank accounts. NYSE<br />
is the New York Stock Exchange. AMEX is the American Stock Exchange <strong>and</strong> NASDAQ is the<br />
National Association of Securities Dealers Automated Quotation system.<br />
6. Correct Answer: d. All of the above<br />
Letters a, b, <strong>and</strong> c are all true.<br />
7. Correct Answer: c. Commission<br />
Commission refers to a fee. Interest is money earned on a bank deposit or a bond or paid on a<br />
loan or credit card. Dividends represent money paid on stock. Return on investment is the profit,<br />
usually calculated as a percentage, made on an investment.<br />
8. Correct Answer: c. Investment advisors<br />
Investment advisors give advice. They do not necessarily buy <strong>and</strong> sell securities or create financial<br />
plans.<br />
9. Correct Answer: c. a capital gain<br />
Dividends are paid on shares owned, not sold. A stock split changes the value of an individual<br />
share of stock, but not your total investment.<br />
10. Correct Answer: b. A term for the redemption value of a bond<br />
Par value is the face value of a bond. It is equal to both the issue price <strong>and</strong> the amount repaid at<br />
maturity.<br />
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