Question 1

Aggressive stock management focuses on the pursuit of

Accepted Answer

Aggressive stock management typically aims for short-term capital gains, focusing on stocks that are expected to provide significant returns in a short period rather than prioritizing dividends or long-term growth.

Question 2

Aggressive stock management

Accepted Answer

Aggressive stock management typically involves active trading strategies that focus on short-term capital gains rather than long-term investments or high dividend yields. This approach seeks to take advantage of market volatility and price movements to generate profits.

Question 3

Amanda purchased stock in a German firm at a price per share of 35 euros when the U.S. $/euro exchange rate was $1.20. After six months, Ann sold the stock for 37 euros when the
u.S. $/euro exchange rate was $1.10. The stock does not pay a dividend. What is Ann's rate of return on this investment?

Accepted Answer

The answer of Amanda purchased stock in a German firm...

Question 4

Which of the following strategies appeal to investors who place primary emphasis on the storage of value aspects of an investment?
I. buy and hold
II. short-term trading
III. quality long-term growth
IV. consistent dividend record

Accepted Answer

Investors who emphasize the storage of value in their investments typically prefer strategies that offer stability and long-term growth potential. "Buy and hold" and "quality long-term growth" strategies focus on retaining and gradually increasing value over time. Investments with a "consistent dividend record" provide regular income, which can also be seen as a way to preserve value. Short-term trading, on the other hand, is more about capitalizing on market volatility and does not primarily focus on the storage of value.

Question 5

Which strategy applies to investors who fund long-term goals with high-quality stocks which they retain for the entire investment period?

Accepted Answer

The "buy and hold" strategy involves purchasing high-quality stocks and retaining them for an extended period, often to fund long-term goals. This approach focuses on the long-term potential of investments rather than short-term fluctuations.

Question 6

Geraldo is 50 years old and plans to retire in 10 years. A good investments strategy for him would be a

Accepted Answer

A buy-and-hold strategy is suitable for someone like Geraldo who is nearing retirement, as it focuses on long-term growth and stability, minimizing the risks associated with frequent trading.

Question 7

Explain why conservative stock portfolio should include some defensive stocks.

Accepted Answer

The answer of Explain why conservative stock portfolio should include...

Question 8

Laurent bought shares of a Canadian company for 78 Canadian dollars per share. Two years later, he sold at 75 Canadian dollars per share. At the time of purchase, the Canadian dollar was at U.S. 81 and at the time of sale, U.S .75. What was Laurent's gain or loss in U.S. dollars?

Accepted Answer

Laurent bought at 78 CAD/share when 1 CAD = 0.81 USD, so he paid 78 * 0.81 = 63.18 USD/share. He sold at 75 CAD/share when 1 CAD = 0.75 USD, so he received 75 * 0.75 = 56.25 USD/share. The loss per share is 63.18 - 56.25 = 6.93 USD.

Question 9

Income stocks are well suited for retirees because

Accepted Answer

Dividends from income stocks often increase over time, providing a growing income stream which is beneficial for retirees.

Question 10

Which one of the following investment strategies would NOT appeal to an investor who is most concerned with storage of value?

Accepted Answer

Speculation and short-term trading focus on capitalizing on market volatility and short-term price movements, which can be risky and does not prioritize the storage of value over time. This approach contrasts with strategies that aim to preserve capital and ensure steady growth or income.

Question 11

Which of the following are advantages of the buy and hold strategy?
I. rapid accumulation of wealth
II. low transaction costs
III. capital gains taxed at the long-term rate
IV. portfolio requires less time and energy to manage than for most other strategies

Accepted Answer

The buy and hold strategy is known for low transaction costs, capital gains being taxed at the long-term rate, and requiring less time and energy to manage the portfolio. Rapid accumulation of wealth is not guaranteed with this strategy.

Quiz 6: Common Stocks