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37 Cards in this Set

  • Front
  • Back
Which of the following has returned the highest returns over time?

-Bonds
-Cash
-Stocks
-Cash & Stocks
-Bonds & Cash
Stocks
Would the Japenese necessarily agree with your answer to question 1? (referring to stocks having the highest returns in any asset class)

Yes or No?
No
Which of the following can be a type of loan to the federal government?

-Bonds
-Notes
-Stocks
-Bills
-all but Stocks
All but stocks
According to the book, building wealth through investment takes:

-time
-effort
-luck
-good math
-avoiding bubbles
time
Which of the following do you not need in order to calculate a return?

-starting price
-ending price
-distributions
-type of asset
-you need all of the above
type of asset
Recall the simple equation for returns I put on the board. If inflation expectations increased from 2% to 3%, what should happen to the expected return of a bond?

-nothing
-increase by an indeterminable amount
-increase by 1%
-increase by 3%
-decrease by 1%
increase by 1%
Again recall the simple equation for return I put on the board. If inflation expectations increased from 2% to 3%, what should happen to the expected return of a stock?

-nothing
-increase by an indeterminable amount
-increase by 1%
-increase by 3%
-decrease by 1%
increase by 1%
A portfolio is a collection of investments.

T/F?
true
Your expected return likely will not match your actual return.

T/F?
true
According to the book, risk is the chance of loss of wealth or a failure to meet investment goals.

T/F?
true
A financial bubble is:

-when the earnings of firms exhibit high growth
-when stocks go into a bull market
-when assets are priced well above their correct value
-all of the above
-none of the above
when assets are priced well above their correct value
An important consideration in investing is the need for a specific time frame (length) for the investment. Not all investments are good for all time frames.

T/F?
true
Which of the following is not an investment Superstar discussed in the book?

-Victor Sperando
-Peter Lynch
-Warren Buffett
-Sir John Templeton
-all of the above are talked about in the book
Victor Sperando
Peter Lynch's method of investment differs form the others mentioned in the book in that he would not say that he is trying to buy stock "cheaply" (for less than its is worth) while the other do.

T/F?
true
Historically, investment in these securities has provided the most risk?

-small cap stocks
-treasury bonds
-treasury bonds
-large cap stocks
-they have equal risks
small cap stocks
Which of the following is not a characteristic of a money market instrument?

-low relative interest rate
-issued by large corporations
-short maturity
-a liquidity premium
-short maturity & a liquidity premium
a liquidity premium
Investor psychology is an important feature of investing. It all boils down to:

-fear
-greed
-lust
-hate
-love
greed
Which of the following is not a stock market participant?

-a specialist
-a stockbroker
-security analyst
-portfolio manager
-all participate in the stock market in some fashion
all participate in the stock market in some fashion
T-bills are financial instruments initially sold by _____ to raise funds.

-commercial banks
-the U.S. government
-state and local governments
-agencies of the federal government
-the U.S. government and agencies of the federal government
the U.S. government
The Dow Jones Industrial Average (DJIA) is computed by:

-adding the prices of 30 large "blue-chip" stocks and dividing by 30.
-calculating the total market value of the 30 firms in the index and dividing by 30.
-adding the prices of the 30 stocks in the index and dividing by a divisor
-adding the prices of the 500 stocks in the index and dividing by a divisor
-adding the prices of the 30 stocks in the index and dividing by the value of these stocks as of some base date period
adding the prices of the 30 stocks in the index and dividing by a divisor
Which of the following indices is (are) market-value weighted?

I) The Nasdaq Composite Index
II) The Standard and Poor's 500 Stock Index
III) The Dow Jones Industrial Average
I and II only
A major different between the NASDAQ and New York Stock Exchange is:

-only one has a physical place for trading
-only one has market makers (or dealers)
-one only has big cap stocks
-all of the above are true
-A & B are true
A and B are true
When we are discussing stocks and use the term "market cap", we are talking about stocks with high prices.

T/F?
false
Which of the following statements regarding the S&P 500 is false?

-The S&P 500 is not very representative of the market as a whole
-The S&P 500 consists of 500 blue chip stocks
-The S&P 500 has financial stocks in it
-The S&P 500 divisor needs to be adjusted for stock splits
-The value of the S&P 500 is much higher than it was in its base year of 1941-1943
The S&P 500 divisor needs to be adjusted for stock splits
The S&P 500 index is a true index in that it takes the price of stocks at one point in time and divides them by the price at a previous point in time. In this way, we can tell how stocks compare over time.

T/F?
false
The ultimate small stock index in the U.S. is the

-Wilshire 5000
-DJIA
-S&P 500
-Russell 2000
-None of the above
Russell 2000
The over-the-counter market (NASDAQ)

-has been growing rapidly in recent years
-is an automated market
-contains some firms that qualify for NYSE listing
-A and B
-A, B, and C
A, B, and C
The ultimate index for the entire stock market in the U.S. is likely

-Wilshire 5000
-DJIA
-S&P 500
-Russell 2000
-none of the above
Wilshire 5000
A round lot is typically 100 share of stock.

T/F?
true
If the interest rate on a ten year government bond is 6%, on a ten year AAA corporate bond is 8%, and the expected inflation rate is 3%, what is the default premium of the corporate bond:

-1%
-2%
-3%
-5%
-6%
2%
Putting daily stock market activity into a word, I called the stock market everything but:

-Psychotic
-Neurotic
-Schizophrenic
-Sadistic
-Chaotic
Chaotic
The first day of class I talked about major issues overhanging in the market. Which of the following is not one I talked about?

-mortgage market mess
-banking mess
-construction meltdown
-presidential race
-all of the above
All of the above
A few years ago, Warren Buffett made a loan to the Williams CO. for $3 billion collateralized by a $900 million dollar pipeline. He charged them thirty percent interest.

T/F?
false
Ben Graham was a famous investor. His strategy was to buy stocks that were growing very rapidly.

T/F?
false
A serious risk for Wal-Mart would be?

-Suzy's shoes don't fit
-China currency revaluation
-Strike by the union
-Gasoline price rising
-None of the above
China currency revaluation
What is the problem with a lot of banks these days?

-not enough locations
-paying too much for deposits
-lack of capital
-low interest rates
-high interest rates
lack of capital
A pension fund would be a part of companies defined contributions plan.

T/F?
false