1. When interest rates go up, bond prices
go down

2. If a share is selling at $60 a share and earning $6 a share, it is said to be selling at a P/E ratio of how much?
10

3. If you don’t redeem your mutual fund shares, you don’t have to pay any taxes.
false (outside of a tax deferred plan, taxes may be owed on interest and dividend income)

4. In the past 10 years, over 70 percent of mutual funds have under-performed S & P 500 index.
true

5. When interest rates are rising, the stock market isn't usually as strong as it is when rates are falling.
true

6. Rate the level of risk associated with each of the following investments on a scale of 1-4, where 1 is low, 2 is limited, 3 is moderate and 4 is high:

3 Real estate investment trusts 

4 B-rated bonds

2 Blue chip stocks  

1 Money market funds 

3 Small company stocks

4 Shares of a mining company

4 Futures, options, and other derivatives   

7. Open-end mutual funds sell securities at a price based on their net asset value, and those shares are usually redeemed at their net asset value.
true

8. Securities firms are obligated to insure their mutual funds.
false

9. What type of mutual fund generally has the highest expense ratio?
global fund

10. A balanced mutual fund:
seeks both income and capital appreciation by investing in stocks and bonds

11. What percentage of the world's securities are traded outside the United States?
80%

12. What comprises the DJIA?
industrial stocks listed on the New York Stock Exchange

13. What are mutual fund expense ratios?
the fixed expenses for administration and management that funds incur

14. When you sell a mutual fund share, what is the cost basis used for determining a gain or loss?
the original purchase price, plus reinvested dividends, interest, and capital gains

15. Which of the following are true of common shares:
dividends are issued at the discretion of the directors of the company.
dividends can be paid as either cash or in additional shares.

16. Corporations split their shares to:
reduce the price of their shares

17. In the event that a company is liquidated, preferred shareholders rank above:
common shareholders

18. Dividends not paid on a preferred share are lost to the investor unless the share has a:
cumulative feature

19. When shares trade cum-dividend, purchasers of the shares receive the dividend as well.
true

20. Since stock exchanges have a minimum price requirement before more shares may be issued, companies sometimes raise the price of their shares to meet the exchange's requirements using a.
reverse-split