An annual report that includes details about a company’s leadership and earnings
A low-risk savings option that can help you build an emergency fund
An investment option that allows you to own a small piece of a company
A measurement of a company’s profits
When evaluating a company's financial health, which of the following metrics is most commonly used to determine its profitability?
Dividend Yield
Market Capitalization
Earnings per Share (EPS)
Price-to-Earnings (P/E) Ratio
Which of the following is TRUE about a stock split?
It affects the company’s market capitalization.
It makes shares more affordable for investors.
It increases the total value of the company.
It decreases the number of shares outstanding.
Which of the following most accurately describes what a bond is?
A share of ownership in a company.
A financial derivative used for trading purposes.
A type of savings account offered by banks.
A loan made by an investor to a borrower, typically corporate or governmental.
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?
Marcus will likely sell the bond at par value.
The selling price will not be affected by interest rates.
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:
Diversification of investments
Regularly reviewing your portfolio
Investing in high-yield bonds
Maintaining an emergency fund
Leaving your investments in the stock market alone for at least five years is a good way to reduce risk because…
It prevents you from making emotional decisions during market downturns.
Short-term market fluctuations tend to average out over a longer period.
It allows you to avoid taxes on your gains.
It guarantees a higher return on investment.
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
Concentrating your investments in a single mutual fund
Purchasing only technology sector stocks
Which of the following best describes investment risk?
The assurance that an investment will increase in value over time.
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.