Unit 5 Investing Chapter Test

2

Which statement best describes inflation?

The projected value of an investment at the end of a specified time frame

The uncertainty about the return on an investment

The rise in the general level of prices

The number of times something happens to money

2

The most common relationship between risk and return in investing can be stated as:

Lower risk indicates higher return

No relationship exists between risk and return

Higher risk indicates lower return

Higher risk indicates higher return

2

Elliot's stock broker is suggesting that he consider investing in a diversified portfolio. A diversified
portfolio is desirable because it:

Limits investors choices to only one or two investment tools

Increases the risk/return ratio

Indicates an investor is a good predictor of the return an investment will have

Decreases risk by investing money in a variety of investment tools

2

Which of the following is NOT true in regards to investing in stock?

A stockholder owns a part of a company.

A stockholder may or may not receive a dividend.

Depending upon the current market price, stockholders may pay different prices for the

same stock.

A stockholder will always receive a profit when the stock is sold.

2

Conner wants to purchase stocks with the money he received from his tax return. Who would he
contact to make the transaction?

A brokerage firm

The New York Stock Exchange

Conner should complete this transaction on his own

A real estate agent

2

Which statement is TRUE of mutual funds?

Mutual Funds are speculative investments

Mutual Funds are a form of real estate investment

Mutual Funds are diversified investments

Mutual Funds are superior purchasing to a single stock

2

Which of the following statements is true in regards to paying taxes on investments?

Taxes are often owed on profits generated from investments.

Since investments are considered unearned income, taxes do no have to be paid on

earnings.

Taxes are always paid on investments either when the money is placed in the investment

or removed from the investment

Taxes only have to be paid on employer-sponsored investment accounts.

5

Morgan is trying to decide how to invest his money. Find the value of the investment in each
scenario. Round each answer to the nearest cent.
Morgan deposits $1,200 in an account once. The account is compounded quarterly for 15 years at a rate of 1.2%
For this question, use the one formua below that is appropriate for this situation:

$7069.92

$1436.27

$8237.25

$78757.92

5

Morgan invests $500 every month for 15 years compounded monthly at a rate of 1.2%
For this question, use the one formua below that is appropriate for this situation:

$249790.09

$141141.04

$598.55

$98554.85

5

Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees.
Calculate Jenny's capital gain/loss. Round your answer to the nearest cent.

Gain: $67.40

Loss: $67.40

Gain: $3.37

Loss: $3.37

5

Same scenario as above: Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees.
Express Jenny's capital gain/loss as a percent of the original price. Round to the nearest tenth of a percent.

3.5%

4.6%

5.7%

6.8%

5

Darlene purchases $20,000 worth of stock on her broker's advice and pays her broker a 1.5% broker
fee. She sells her stock when it increases to $28,600 two years later, and uses a discount broker who
charges $21 per trade. Calculate Darlene's net proceeds after the broker fees are taken out. Round
your answer to the nearest cent.

$5579.00

$8300.00

$8600.00

$8279.00

5

Vilma owns 750 shares of Aeropostale. The corporation instituted a 2-for-1 stock split. . How many
shares did Vilma hold after the split?

375 shares

1500 shares

1125 shares

She owns the same amount of shares after the split.

5

A company instituted a 1-for-10 reverse split. The pre-split price per share was $2.15. What was the post-split price per share? Round your answer to the nearest cent.

.22 cents per share

21.50 dollars per share

$2.15 dollars per share

.21 cents per share

5

Walt Disney Company pays an annual dividend of $7.40 per share. The price of a disney stock is $200.00 per share. What is the yield?

37%

3.7%

27.03%

.037%

5

Nike pays a quarterly dividend of $1.85 per share. If you owned 500 shares, what would your YEARLY dividend be?
Hint: A quarterly dividend is paid 4 times a year.

$900 per year

$925 per year

$3700 per year

$270.27 per year

5

The value of all Instagram stock in the entire stock market (Market Cap) is 2.4 billion dollars.
They instituted a 2-for-1 stock split. What is Instagram's Market Capitalization AFTER the split?

1.2 billion dollars

4.8 billion dollars

2.4 billion dollars

Unit 5 Investing Chapter Test

Which statement best describes inflation?

The most common relationship between risk and return in investing can be stated as:

Elliot's stock broker is suggesting that he consider investing in a diversified portfolio. A diversifiedportfolio is desirable because it:

Which of the following is NOT true in regards to investing in stock?

Conner wants to purchase stocks with the money he received from his tax return. Who would hecontact to make the transaction?

Which statement is TRUE of mutual funds?

Which of the following statements is true in regards to paying taxes on investments?

Morgan invests $500 every month for 15 years compounded monthly at a rate of 1.2%For this question, use the one formua below that is appropriate for this situation:

Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees.Calculate Jenny's capital gain/loss. Round your answer to the nearest cent.

Same scenario as above: Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees. Express Jenny's capital gain/loss as a percent of the original price. Round to the nearest tenth of a percent.

Vilma owns 750 shares of Aeropostale. The corporation instituted a 2-for-1 stock split. . How manyshares did Vilma hold after the split?

A company instituted a 1-for-10 reverse split. The pre-split price per share was $2.15. What was the post-split price per share? Round your answer to the nearest cent.

Walt Disney Company pays an annual dividend of $7.40 per share. The price of a disney stock is $200.00 per share. What is the yield?

Nike pays a quarterly dividend of $1.85 per share. If you owned 500 shares, what would your YEARLY dividend be?Hint: A quarterly dividend is paid 4 times a year.

The value of all Instagram stock in the entire stock market (Market Cap) is 2.4 billion dollars. They instituted a 2-for-1 stock split. What is Instagram's Market Capitalization AFTER the split?

Which statement best describes inflation?

The most common relationship between risk and return in investing can be stated as:

Elliot's stock broker is suggesting that he consider investing in a diversified portfolio. A diversifiedportfolio is desirable because it:

Which of the following is NOT true in regards to investing in stock?

Conner wants to purchase stocks with the money he received from his tax return. Who would hecontact to make the transaction?

Which statement is TRUE of mutual funds?

Which of the following statements is true in regards to paying taxes on investments?

Morgan invests $500 every month for 15 years compounded monthly at a rate of 1.2%For this question, use the one formua below that is appropriate for this situation:

Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees.Calculate Jenny's capital gain/loss. Round your answer to the nearest cent.

Same scenario as above: Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees. Express Jenny's capital gain/loss as a percent of the original price. Round to the nearest tenth of a percent.

Vilma owns 750 shares of Aeropostale. The corporation instituted a 2-for-1 stock split. . How manyshares did Vilma hold after the split?

A company instituted a 1-for-10 reverse split. The pre-split price per share was $2.15. What was the post-split price per share? Round your answer to the nearest cent.

Walt Disney Company pays an annual dividend of $7.40 per share. The price of a disney stock is $200.00 per share. What is the yield?

Nike pays a quarterly dividend of $1.85 per share. If you owned 500 shares, what would your YEARLY dividend be?Hint: A quarterly dividend is paid 4 times a year.

The value of all Instagram stock in the entire stock market (Market Cap) is 2.4 billion dollars. They instituted a 2-for-1 stock split. What is Instagram's Market Capitalization AFTER the split?

Elliot's stock broker is suggesting that he consider investing in a diversified portfolio. A diversified
portfolio is desirable because it:

Conner wants to purchase stocks with the money he received from his tax return. Who would he
contact to make the transaction?

Morgan invests $500 every month for 15 years compounded monthly at a rate of 1.2%
For this question, use the one formua below that is appropriate for this situation:

Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees.
Calculate Jenny's capital gain/loss. Round your answer to the nearest cent.

Same scenario as above: Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees.
Express Jenny's capital gain/loss as a percent of the original price. Round to the nearest tenth of a percent.

Vilma owns 750 shares of Aeropostale. The corporation instituted a 2-for-1 stock split. . How many
shares did Vilma hold after the split?

Nike pays a quarterly dividend of $1.85 per share. If you owned 500 shares, what would your YEARLY dividend be?
Hint: A quarterly dividend is paid 4 times a year.

The value of all Instagram stock in the entire stock market (Market Cap) is 2.4 billion dollars.
They instituted a 2-for-1 stock split. What is Instagram's Market Capitalization AFTER the split?

Elliot's stock broker is suggesting that he consider investing in a diversified portfolio. A diversified
portfolio is desirable because it:

Conner wants to purchase stocks with the money he received from his tax return. Who would he
contact to make the transaction?

Morgan invests $500 every month for 15 years compounded monthly at a rate of 1.2%
For this question, use the one formua below that is appropriate for this situation:

Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees.
Calculate Jenny's capital gain/loss. Round your answer to the nearest cent.

Same scenario as above: Jenny purchased stock in Bitcoin for $1473.40. A month later Jenny sold her shares of Bitcoin stock for 1540.80. There were no fees.
Express Jenny's capital gain/loss as a percent of the original price. Round to the nearest tenth of a percent.

Vilma owns 750 shares of Aeropostale. The corporation instituted a 2-for-1 stock split. . How many
shares did Vilma hold after the split?

Nike pays a quarterly dividend of $1.85 per share. If you owned 500 shares, what would your YEARLY dividend be?
Hint: A quarterly dividend is paid 4 times a year.

The value of all Instagram stock in the entire stock market (Market Cap) is 2.4 billion dollars.
They instituted a 2-for-1 stock split. What is Instagram's Market Capitalization AFTER the split?