Question 1

A good source of investment advice is a neutral party that doesn't charge a fee or earn a commission from you.

Accepted Answer

A neutral party that doesn't charge a fee or earn a commission is more likely to provide unbiased investment advice without any conflict of interest. Such parties can include academic research, financial publications, and government websites, among others.

Question 2

An investor should always consider the source when receiving stock tips from other people.

Accepted Answer

It is important for investors to consider the credibility and motivation of the source giving them stock tips, as they may have biases or not have done thorough research themselves.

Question 3

According to the Love & Money section,what percent of Americans fully recover financially from divorce?
A)50%
B)25%
C)33%
D)75%

Accepted Answer

The Love & Money section states that "studies show that just one-third of people fully recover financially from divorce." Therefore, the correct answer is C) 33%.

Question 4

It is a good idea for every investor to read the Wall Street Journal.

Accepted Answer

The Wall Street Journal is a reputable financial newspaper that provides valuable information and insights to investors. It covers a wide range of topics such as market trends, company news, economic developments, and investment strategies. Reading this newspaper can help investors stay informed and make more informed investment decisions.

Question 5

According to your text,"falling in love" with your stock is a good idea.

Accepted Answer

Falling in love with your stock may lead to emotional decision making and prevent you from selling at the right time. It's important to have a rational and disciplined approach to investing.

Question 6

Brokerage firm reports
A)are provided by all discount brokers.
B)provide access to research reports prepared by the firm's securities analysts.
C)analyze individual companies but not the direction of the economy as a whole.
D)are only valuable if you buy the recommended stocks.
E)all of the above

Accepted Answer

Brokerage firm reports provide access to research reports prepared by the firm's securities analysts. They analyze individual companies and provide insights and recommendations for investing in particular stocks. However, they do not necessarily offer guidance on the direction of the overall economy. It is up to the investor to decide whether or not to follow the recommended stocks.

Question 7

Which statement is true regarding overconfidence?
A)Overconfidence leads to trading too often.
B)Overconfidence afflicts women more often than men,and it also leads women to trade too often.
C)Overconfident investors think they can beat the market.
D)Both A and C

Accepted Answer

Overconfidence can lead investors to believe they can beat the market and therefore trade too often, which can ultimately lead to lower returns. This behavioral bias is not specific to one gender, but rather affects both men and women. Therefore, both statement A and C are true.

Question 8

The reluctance effect plays on the fear of regret and the seeking of pride,resulting in selling winning stocks too soon and keeping losing stocks too long.

Accepted Answer

The answer of The reluctance effect plays on the fear...

Question 9

What requires you to add cash or securities when the value drops below a specified amount?
A)Maintenance Margin
B)Initial Margin
C)Margin Call
D)Margin Account

Accepted Answer

A Margin Call requires you to add cash or securities when the value drops below a specified amount. Maintenance Margin and Initial Margin are also related to margin trading, but they do not specifically require adding cash or securities when value drops below a specified amount. A Margin Account is simply an account used for margin trading.

Question 10

Investment advice is very difficult to find and expensive to purchase.

Accepted Answer

There are many sources of investment advice that are easily accessible and often free, such as online resources and forums, books, and advice from friends and family. However, it is important to carefully evaluate the credibility and motives of any source of investment advice before making decisions. Additionally, professional financial advisors can offer valuable guidance, but their services may come with fees.

Question 11

Investors have access to an incredible amount of corporate information on the Internet,including news sites,free software,and discussion groups.According to the Keown book,which websites reflect the greatest online sources of investment information?
I.Yahoo! Finance
II.CNNMoney.com
III.The Motley Fool
IV.EDGAR
A)I only
B)I and II
C)I,II,and III
D)I,II,III,and IV

Accepted Answer

The Keown book highlights Yahoo! Finance, CNNMoney.com, The Motley Fool, and EDGAR as some of the greatest online sources of investment information. Therefore, the best choice is D as it includes all four websites.

Question 12

If you're going to make informed investment decisions,you have to seek investment information,read it,and interpret it.

Accepted Answer

To make informed investment decisions, seeking investment information, reading it, and interpreting it is essential. This helps in understanding market trends, company performance, and financial indicators that can guide in making investment decisions.

Question 13

Jordan short sells 500 shares of Facebook at $200.Her broker has a 50% margin requirement.Facebook does not pay a dividend and commissions and other charges total $50.What dollar amount of collateral must she have in her account?
A)$50,000
B)$10,000
C)$100,000
D)$25,000

Accepted Answer

The margin requirement is 50%, so Jordan must have 50% of the value of the shares in her account as collateral. The value of the shares is 500 * $200 = $100,000. So, Jordan must have $100,000 * 0.50 = $50,000 in her account as collateral.

Question 14

Jordan short sells 500 shares of Facebook at $200.Her broker has a 50% margin requirement.Facebook does not pay a dividend and commissions and other charges total $50.Shares of Facebook drop to $175 and she covers.What is her profit/loss?
A)$12,500
B)$12,450
C)-$12,450
D)-$12,500

Accepted Answer

Jordan's profit from the short sale is calculated as follows: She initially sells 500 shares at $200 each, totaling $100,000. She then covers (buys back) the shares at $175 each, totaling $87,500. The difference between her sell and buy prices is her gross profit: $100,000 - $87,500 = $12,500. After subtracting commissions and other charges of $50, her net profit is $12,500 - $50 = $12,450.

Question 15

The primary sources of information about the stock market and individual stocks are Moody's Investors Service,Standard & Poor's Stock Reports,Morningstar Investment Reports,and the Value Line Investment Survey.

Accepted Answer

These are all well-known and respected sources of information for investors and analysts when researching stocks and the overall market.

Question 16

According to the Keown book,overconfidence afflicts women more often than men,and it also leads women to trade too often.

Accepted Answer

The Keown book actually states that overconfidence afflicts men more often than women, and that men are more likely to trade too often as a result.

Question 17

The Internet is full of investment information,and all of it is stringently regulated so you can be sure of its reliability.

Accepted Answer

The statement is false. While there is a lot of investment information on the internet, not all of it is regulated, and not all of it is reliable. It is important to carefully research and evaluate investment information found online before making any investment decisions.

Question 18

A round lot order is an order of how many shares?
A)10
B)50
C)100
D)1,000

Accepted Answer

A round lot order is an order of 100 shares.

Question 19

According to the Keown book,which of the following is not a primary source of information about the stock market and individual stocks?
A)Fitch Investment Survey
B)Moody's Investors Service
C)Standard & Poor's Stock Reports
D)Morningstar Investment Reports 2

Accepted Answer

The Keown book does not list the Fitch Investment Survey as a primary source of information about the stock market and individual stocks, while the other options, including Moody's Investors Service, Standard & Poor's Stock Reports, and Morningstar Investment Reports, are all listed as primary sources.

Question 20

According to the Love & Money section,on average,how long does it take Americans to recover financially from a divorce?
A)10 years
B)5 years
C)2 years
D)6 months

Accepted Answer

According to the Love & Money section, on average, it takes about 5 years for Americans to recover financially from a divorce.

Quiz 11: Investment Basics

A good source of investment advice is a neutral party that doesn't charge a fee or earn a commission from you.

An investor should always consider the source when receiving stock tips from other people.

According to the Love & Money section,what percent of Americans fully recover financially from divorce?

It is a good idea for every investor to read the Wall Street Journal.

According to your text,"falling in love" with your stock is a good idea.

Brokerage firm reports

Which statement is true regarding overconfidence?

The reluctance effect plays on the fear of regret and the seeking of pride,resulting in selling winning stocks too soon and keeping losing stocks too long.

What requires you to add cash or securities when the value drops below a specified amount?

Investment advice is very difficult to find and expensive to purchase.

If you're going to make informed investment decisions,you have to seek investment information,read it,and interpret it.

Jordan short sells 500 shares of Facebook at $200.Her broker has a 50% margin requirement.Facebook does not pay a dividend and commissions and other charges total $50.What dollar amount of collateral must she have in her account?

Jordan short sells 500 shares of Facebook at $200.Her broker has a 50% margin requirement.Facebook does not pay a dividend and commissions and other charges total $50.Shares of Facebook drop to $175 and she covers.What is her profit/loss?

The primary sources of information about the stock market and individual stocks are Moody's Investors Service,Standard & Poor's Stock Reports,Morningstar Investment Reports,and the Value Line Investment Survey.

According to the Keown book,overconfidence afflicts women more often than men,and it also leads women to trade too often.

The Internet is full of investment information,and all of it is stringently regulated so you can be sure of its reliability.

A round lot order is an order of how many shares?

According to the Keown book,which of the following is not a primary source of information about the stock market and individual stocks?

According to the Love & Money section,on average,how long does it take Americans to recover financially from a divorce?