An investment option that allows you to own a small piece of a company
A low-risk savings option that can help you build an emergency fund
A measurement of a company’s profits
An annual report that includes details about a company’s leadership and earnings
When evaluating a company's financial health, which of the following metrics is most commonly used to determine its profitability?
Price-to-Earnings (P/E) Ratio
Dividend Yield
Earnings per Share (EPS)
Market Capitalization
Which of the following is TRUE about a stock split?
It affects the company’s market capitalization.
It increases the total value of the company.
It makes shares more affordable for investors.
It decreases the number of shares outstanding.
Which of the following most accurately describes what a bond is?
A loan made by an investor to a borrower, typically corporate or governmental.
A type of savings account offered by banks.
A financial derivative used for trading purposes.
A share of ownership in a company.
Marcus buys a bond with a fixed coupon rate of 3%. Six months later, similar bonds issued have a coupon rate of 4%. Which of the following is TRUE if he chooses to sell the bond before maturity?
The selling price will not be affected by interest rates.
Marcus will likely sell the bond at par value.
Marcus will likely sell the bond at a discount.
Marcus will likely sell the bond at a premium.
One difference between bonds and bond funds is:
Bonds are debt securities, while bond funds are equity investments.
Bonds provide fixed income, while bond funds have fluctuating income.
Bonds can only be purchased at par value, while bond funds can be traded at any price.
Bonds are managed by financial advisors, while bond funds are not.
All of the following are strategies to reduce risk EXCEPT:
Maintaining an emergency fund
Diversification of investments
Regularly reviewing your portfolio
Investing in high-yield bonds
Leaving your investments in the stock market alone for at least five years is a good way to reduce risk because…
Short-term market fluctuations tend to average out over a longer period.
It prevents you from making emotional decisions during market downturns.
It guarantees a higher return on investment.
It allows you to avoid taxes on your gains.
Which of the following is an example of diversification?
Holding a mix of stocks, bonds, and real estate in your portfolio
Investing all your money in one company's stock
Purchasing only technology sector stocks
Concentrating your investments in a single mutual fund
Which of the following best describes investment risk?
The likelihood of losing all your initial investment.
The chance that an investment’s actual return will differ from the expected return.
The possibility of earning a guaranteed return on an investment.
The assurance that an investment will increase in value over time.