Reference no: EM133070812

1. What are the benefits of investing in mutual funds instead of stocks?

• You can trade one company at any time
• You can beat the S&P 500 index
• It will cost less in terms of fees
• It offers a way to diversify your investment portfolio and minimize risk

2. What defines a Bear Market?

• High investor confidence
• Increased stock prices
• Investors become spectators rather than players
• A period of hibernation

3. Which of the following four investments has shown the highest returns over the last 100 years?

• Real Estate
• Bonds
• Stocks
• Cash

4. How does the S&P 500 Index serve as a common stock market benchmark?

• It averages the prices of 500 companies for a view of the overall stock market direction
• It considers all the stocks to gauge stock market performance
• It focuses on small publicly traded companies to benchmark the stock market's situation
• It combines the top U.S. and international stocks to deliver an overall performance rating

5. What does it mean to buy on margin?

• You purchase securities using some of your own money and collateral from stocks already owned
• You buy the stocks completely through a loan
• You use the profits from one stock to buy another
• You pay with a credit card

6. How should you plan your investment strategy?

• Decide you want to make money
• target or goal for all investment activities
• Plan to become wealthy
• Make decisions as it suits you

7. What can be learned from Warren Buffet's approach to investing?

• Skip the research
• Sell, sell, sell
• Use a buy and hold strategy
• Pay attention to rumors and pure market price indicators

8. What is the Sharpe Ratio?

• A measure of a portfolio's return versus the riskiness of the portfolio
• A way to spread out your stock sales
• A ratio that helps you evaluate a stock price
• A ratio that tells you how much of your portfolio to invest in a particular stock

9. What is Peter Lynch's primary investment theory?

• Invest in what you know
• Become an expert at complex investing strategies
• Read many books
• Listen to your broker

10. What actions will help you stick to your exit strategy?

• Letting someone else make the decisions for you
• Initiating Stop-Loss Orders
• Not selling stocks - ever - like Warren Buffett does
• Playing Devil's Advocate when making decisions

11. When is it advisable to disregard the "ride your winners, dump your losers" strategy?

• When you've got a really good feeling
• When the stock is in a hot sector
• When you feel the stock market is at a top (sell!) or the stock is a value investment (buy!)
• When selling or buying a particular stock unbalances your portfolio

12. How should you view your stock purchases?

• You need stocks in retirement, so be patient
• Stocks award those that remain loyal
• Stocks are a business, so sell without remorse and move on
• Stocks are for fun, so enjoy yourself

13. What do 10Qs and 10Ks do?

• Allow public companies a way to attract potential investors
• Offer colorful and illuminating content
• Display all pertinent information without the PR spin
• Deliver new ways of calculating profits

14. How should one view revenue and earnings estimates?

• Base decisions on the company's internally-generated projections
• As well researched professional opinions
• Explore what criteria and assumptions led to those estimates
• Determine that estimates are not reliable except when issued by the company

15. What should determine an actual profit?

• Extraordinary events
• Net income
• Total operating results and consistent net income
• Material losses verses revenue

16. What does technical analysis look at for investment purposes?

• A company's revenue growth rate
• A company's competition
• A company's profit margins
• The recent price and volumes at which a stock has traded

17. What are candlesticks?

• A type of chart pattern that shows you bright stocks that are about to rise
• A type of chart that identifies risky stocks
• A chart that tracks stock prices over a short time, usually a few hours
• A Japanese stock chart that is made up of vertical blocks rather than trendlines

18. What is the objective of Bollinger Bands?

• Smooth out data points to find an average stock price over time
• Create ratio sequences for stock prices
• Identify a relative definition of high and low stock prices over a certain time period
• Compare the strength and magnitude of a stock's gains and losses over time

19. What is swing trading?

• Buying when the price gets to the bottom of the channel
• Buying when the price gets to the top of the tunnel and selling at the bottom
• Selling when the price gets to the bottom of the channel
• Using swing music to find price patterns in stocks

20. What is investor sentiment?

• The stock market's attitude towards specific stocks, industries, or market conditions
• Technical information about specific stocks, industries, or market conditions
• Something that has no effect on market prices
• Something that is intangible, it's the emotional measure of a stock and can't be measured

21. What is insider trading?

• A highly illegal and unethical method of trading stocks
• Something reserved for rich or famous people
• A transaction that involves private knowledge about a company and its stocks and securities
• A transaction that always violates fiduciary responsibility

22. What are put options?

• An option to buy at an agreed upon price
• An option to sell at an agreed upon price
• An option that is the opposite of a short position
• The ability to lock in a purchase price

23. What do writing covered calls enable an investor to do?

• The writer has the ability to buy on margin
• The buyer owns the underlying asset
• The buyer can perform the agreement without incurring further risk
• The writer can make easy money

24. What does volatility mean for an investor?

• Prices are falling
• Prices are rising
• Potential risk and uncertainty
• A measurement of price momentum

25. What is one of ten important investment keys to remember?

• You can't really beat the market
• Set unrealistic expectations
• Disregard time horizons
• You don't really need a plan. Just go with your gut

26. What happens when an investor over-diversifies?

• The portfolio has many small investments and has difficulty beating the market
• His portfolio never beats the S&P500
• His portfolio becomes very volatile
• They create high-risk scenarios

27. What is central to investment performance success?

• High IQ
• Natural Born Talent
• Practice
• Who you know, not what you know