Economy: Chapter 11

A stock split is most likely to occur when . . . a company is losing money. stockholders demand higher dividends. the price of a stock becomes too high. the stock market as a whole is doing poorly.

A steady rise in the stock market over a period of time: bear market bull market capital gain capital loss dividend

All are basic components of bonds except: maturity. liquidity. par value. coupon rate.

The Dow Jones Industrial Average consists of . . . 500 different stocks that change annually. 30 stocks that are considered representative of the market as a whole. the top-selling 250 stocks over a 10-year period. 60 stocks selected from the NYSE, the NASDAQ-AMEX, and the OTC market.

The main advantage of diversification of investments is it . . . reduces risk to investors. increases investors' access to their money. offsets the effects of inflation on investments. guarantees a fixed rate of return on an investment.

A collection of financial assets: speculation portfolio equities prospectus money market

The use of assets to earn income or profits: investment yield capital gain prospectus

The act of redirecting resources from being consumed today so that they may create benefits in the future: speculation portfolio equities investment return

Claims of ownership in a corporation: prospectus dividend capital gains equities

An example of blue chip stock might be . . . a new start-up firm. a foreign-owned company that operates in another country. an established company that is traded over the Internet. a large, well-known company traded on the NYSE.

The interest rate the bond issuer pays to the bondholder: coupon rate. maturity rate. discount rate. value rate.

When a stockholder sells shares for more than was paid: bear market bull market capital gain capital loss dividend

The annual rate of return on a bond if the bond were held to maturity: prospectus yield capital gain par value

A person does not have to pay state taxes on interest earned on . . . corporate bonds. municipal bonds. money market mutual funds. junk bonds.

The money an investor receives above and beyond the sum of money initially invested: speculation prospectus equities return

The practice of making high-risk investments with borrowed money in hopes of getting a big return: speculation portfolio stacking equity bumping pineapple folding

An example of equity is . . . a treasury bond. a share of stock. a treasury bill. a long-term certificate of deposit.

Money in a mutual fund . . . is invested in a variety of insurance policies. is easier to access than in a savings account. is invested in a variety of stocks and bonds. is guaranteed a fixed return on the investment.

The greatest number of trades are made . . . on the New York Stock Exchange. at the Chicago Board of Trade. on the NASDAQ-AMEX. on the OTC market.

A steady drop in the price of stocks over a period of time: bear market bull market capital gain capital loss dividend

All are examples of financial intermediaries except: a stock certificate. a finance company. a life insurance company. a savings and loan association.

Investing in a money market mutual fund is a higher risk than investing in a certificate of deposit because unlike CDs, money market funds . . . are not insured by the FDIC. are not protected by the Securities and Exchange Commission. do not earn a fixed interest rate. must be held for a preset amount of time.

Savings bonds differ from most other bonds in that . . . they provide a higher rate of return. they are held for a shorter time. the buyer does not receive periodic interest payments in exchange for a lower purchase price. they are issued in fairly large denominations in exchange for a lower purchase price.

An investment report to potential investors: bear sheet bull sheet prospectus equity analysis

Amount paid to purchase a bond that will be repaid at maturity: par value yield capital gain prospectus

To finance the building of a new police station, a local government is most likely to issue a ____________ . junk bond. treasury bond. municipal bond. money market bond.

Market in which money is lent for periods less than a year: primary market secondary market money market equity stream

All are low-risk investments except: junk bonds. treasury bonds. municipal bonds. savings bonds.

Claim on the property or income of a borrower: financial asset loan coupon capital gain equity