Question 1

Diana is planning to begin investing, so she schedules time to do some research. Diana is intrigued when she finds some information about a type of investment that interests her. While there are some fees associated with the investment, she will be able to easily spread out her risk thanks to the many different options that are available. The investments are also professionally managed, so she can read a short summary before purchasing any shares without having to do any research. Diana has most likely discovered
A) mutual funds.
B) revenue bonds.
C) commodities.
D) preferred stock.
E) exchange-traded funds.

Accepted Answer

Mutual funds allow investors to diversify their risk across various securities, are professionally managed, and provide summaries for investors, aligning with Diana's findings.

Question 2

Deepika is meeting with a financial advisor to discuss her desire to begin investing. The first area that the advisor wants to cover focuses on the amount of money Deepika wants to have when she reaches her desired retirement age. The advisor most likely wants to know about Deepika's
A) portfolio
B) liquidity.
C) goals.
D) portfolio.
E) asset allocation.

Accepted Answer

The advisor is interested in Deepika's goals to understand her desired retirement savings, which will guide the investment strategy.

Question 3

Opeyemi is discussing his investment strategy with a friend. The friend tells Opeyemi to review his portfolio to ensure he has options he can convert to cash in the event of an emergency. Which of the factors that make up an investor's profile does this best represent?
A) liquidity
B) risk
C) asset allocation
D) available funds
E) speculation

Accepted Answer

Liquidity refers to how quickly and easily an investment can be converted into cash without significant loss in value, which is exactly what Opeyemi's friend is advising him to consider in his investment strategy for emergency situations.

Question 4

Kahina keeps a very close eye on world affairs and always considers how particular issues might impact the financial environment. If she sees an issue, Kahina is quick to adjust her investments to adapt to the changes. Which of the factors that make up an investor's profile does this best represent?
A) asset allocation
B) available funds
C) speculation
D) liquidity
E) risk

Accepted Answer

The answer of Kahina keeps a very close eye on...

Question 5

Salvatrice is a commodities investor. He loves looking for opportunities that offer the possibility for tremendous profit, even if they pose a large risk. Which of the factors that make up an investor's profile does this best represent?
A) risk
B) goals
C) risk allocation
D) available funds
E) speculation

Accepted Answer

Salvatrice's behavior is best described as speculation, which is a type of investment that involves a high degree of risk in the pursuit of high returns.

Question 6

Irene and Serena recently were married. They want to ensure they start investing for their future, so they sit down to review their income. When they are done, they want to reach an agreement as to how much they will invest from each of their respective paychecks. Which of the factors that make up an investor's profile does this best represent?
A) goals
B) risk
C) available funds
D) taxes
E) speculation

Accepted Answer

The scenario described involves Irene and Serena deciding how much money they can allocate from their paychecks towards investments, which directly relates to the factor of "available funds" in an investor's profile. This factor concerns how much money an investor has available to invest after accounting for all expenses and obligations.

Question 7

Rajya is very pleased by the money she has made from investing in securities. This income can also be described as the
A) secondary gain.
B) par value.
C) dividend.
D) yield.
E) market rate.

Accepted Answer

The answer of Rajya is very pleased by the money...

Question 8

Jung-Hoon is comfortable taking on significant risk in order to maximize his savings. He primarily invests in start-ups and companies that focus on new technology. Which investment strategy does this best represent?
A) market timing
B) value investing
C) buying and holding
D) investing for income
E) investing for growth

Accepted Answer

Jung-Hoon's strategy of investing in start-ups and companies focusing on new technology to maximize savings aligns with investing for growth. This approach typically involves higher risk for the potential of higher returns, focusing on companies expected to grow at an above-average rate compared to their industry or the overall market.

Question 9

Bjorn wants to pay for his son's college education so that his son can be debt-free when he graduates. Bjorn needs to have a reliable source of income so that he can make regular payments to the school. Which investment strategy would be best for Bjorn's situation?
A) investing for growth
B) market timing
C) value investing
D) investing for income
E) buying and holding

Accepted Answer

Investing for income is the best strategy for Bjorn because it focuses on generating regular income through dividends or interest, which can be used to make regular payments for his son's college education.

Question 10

Faris enjoys researching and analyzing investment options. He is always trying to uncover stocks that he perceives as undervalued. When he finds an undervalued stock, he buys it with the hope that other investors will eventually want to buy the same stocks, which will increase their price. Which investment strategy does this best represent?
A) market timing
B) investing for growth
C) value investing
D) buying and holding
E) investing for income

Accepted Answer

Faris's strategy of looking for undervalued stocks to buy in anticipation of their price increase aligns with value investing. This approach focuses on finding stocks that are believed to be trading for less than their intrinsic values.

Question 11

Keston left his career in information technology to focus on investing. He loves the thrill of taking a risk that could lead to income. His favorite investment activity centers around buying stock at a low price and then quickly selling it at a higher price. Which investment strategy does this best represent?
A) investing for income
B) buying and holding
C) market timing
D) value investing
E) investing for growth

Accepted Answer

Keston's strategy of buying stock at a low price and quickly selling it at a higher price is best described as market timing. This approach involves attempting to predict market price movements to buy low and sell high in a short period.

Question 12

What is the primary securities market? Describe the role investment banking has in the primary securities market.

Accepted Answer

The answer of What is the primary securities market? Describe...

Question 13

Define the three types of securities and provide at least two examples of each one.

Accepted Answer

The answer of Define the three types of securities and...

Question 14

Provide an overview of the ways that stocks are valued.

Accepted Answer

The answer of Provide an overview of the ways that...

Question 15

You are interested in buying stock in Technocube, a technology company. Provide an example that illustrates what you would tell your broker under each of the three conditions for securities orders.

Accepted Answer

The answer of You are interested in buying stock in...

Quiz 15: Pricing and Distribution

Deepika is meeting with a financial advisor to discuss her desire to begin investing. The first area that the advisor wants to cover focuses on the amount of money Deepika wants to have when she reaches her desired retirement age. The advisor most likely wants to know about Deepika's

Opeyemi is discussing his investment strategy with a friend. The friend tells Opeyemi to review his portfolio to ensure he has options he can convert to cash in the event of an emergency. Which of the factors that make up an investor's profile does this best represent?

Salvatrice is a commodities investor. He loves looking for opportunities that offer the possibility for tremendous profit, even if they pose a large risk. Which of the factors that make up an investor's profile does this best represent?

Rajya is very pleased by the money she has made from investing in securities. This income can also be described as the

Jung-Hoon is comfortable taking on significant risk in order to maximize his savings. He primarily invests in start-ups and companies that focus on new technology. Which investment strategy does this best represent?

Bjorn wants to pay for his son's college education so that his son can be debt-free when he graduates. Bjorn needs to have a reliable source of income so that he can make regular payments to the school. Which investment strategy would be best for Bjorn's situation?

What is the primary securities market? Describe the role investment banking has in the primary securities market.

Define the three types of securities and provide at least two examples of each one.

Provide an overview of the ways that stocks are valued.

You are interested in buying stock in Technocube, a technology company. Provide an example that illustrates what you would tell your broker under each of the three conditions for securities orders.