1. When interest rates go up, bond prices

also go up
go down
stay the same

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
.60
6

3. If you don’t redeem your mutual fund shares, you don’t have to pay any taxes.

true
false

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

true
false

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

true
false

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:

1 2 3 4 Real estate investment trusts 

1 2 3 4 B-rated bonds

1 2 3 4 Blue chip stocks  

1 2 3 4 Money market funds 

1 2 3 4 Small company stocks

1 2 3 4 Shares of a mining company

1 2 3 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
false

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

true
false

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

global fund
index fund
growth fund
bond fund

10. A balanced mutual fund:

maintains a stable net asset value over the life of the fund
seeks both income and capital appreciation by investing in stocks and bonds
invests the same amount evenly in many securities
 

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

40%
60%
80%

12. What comprises the DJIA?

all companies listed on the New York Stock Exchange
30 selected major corporations from the NYSE and NASDAQ
industrial stocks listed on the New York Stock Exchange

13. What are mutual fund expense ratios?

the spreads between bid and ask prices
the relationship between investment returns and interest rates
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
the original purchase price, plus reinvested dividends, interest, and capital gains
the sale price minus capital gains

15. Which of the following are true of common shares:

dividends are issued at the discretion of the directors of the company.
the amount of the dividend is pre-set.
dividends can be paid as either cash or in additional shares.
common shares are callable at the discretion of the company's board.

16. Corporations split their shares to:

reduce the number of shares in the marketplace
reduce the price of their shares
create treasury shares which can be used for DRIPs
all of the above

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

creditors
common shareholders
bond holders
all of the above

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

callable feature
retractable feature
sinking fund
cumulative feature

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

true
false

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.

share buy-back
share split
reverse-split

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