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A securities market in which prices have declined in value 20 percent or more from the previous high is called a bull market.

A) True
B) False

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Business-cycle and market-volatility risks are essentially the same..

A) True
B) False

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Investors who do not want to lose any of the money that they have invested are most interested in​


A) ​preservation of capital.
B) ​income stocks.
C) ​liquidity.
D) ​leverage.

E) A) and C)
F) All of the above

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Research suggests that you can eliminate random risk by holding ____ or more stocks and bonds.


A) ​5
B) ​10
C) ​15
D) ​20

E) C) and D)
F) A) and B)

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Marc purchased 100 shares of LXM stock for $25 per share and sold this same stock two years later for $28 per share.He paid commissions of $50 when he purchased the stock and $55 when he sold the stock.No dividends were paid during the period he owned LXM.Marc's current income from this investment is ____,and his capital gains were ____.


A) ​$0;$195
B) ​$0;$300
C) ​$195;$0
D) ​$300;$0

E) A) and C)
F) All of the above

Correct Answer

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Securities are made up of​


A) ​stocks.
B) ​bonds.
C) ​mutual funds.
D) ​All of these.

E) B) and D)
F) B) and C)

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Savings is the accumulation of excess funds by intentionally spending less than you earn.

A) True
B) False

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Performing a large number of calculations on the possible returns from a mix of combinations of investments in an overall portfolio is called​


A) ​Monte Carlo analysis.
B) ​leverage.
C) ​Black Jack strategy.
D) ​asset allocation.

E) All of the above
F) B) and C)

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Your goals and the time it will take to reach them dictate the investment strategies you follow and the investment alternatives you choose.

A) True
B) False

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With a fixed maturity,the borrower agrees to pay the investor a specific rate of return for use of the principal.

A) True
B) False

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Investors with a(n) ____ investment philosophy seek capital gains through slow and steady growth in the value of their investments along with some current income.


A) ​moderate
B) ​conservative
C) ​aggressive
D) ​ultraconservative

E) All of the above
F) C) and D)

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An investment that faces high marketability risk also has high liquidity risk.

A) True
B) False

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The likelihood that an investment market will fluctuate up and down is its market


A) ​vulnerability.
B) ​diversity.
C) ​volatility.
D) ​leverage.

E) None of the above
F) A) and B)

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