UGBA 135 STUDYS ALL CORRECT QUESTIONS
AND ANSWERS SURE A+
✔✔Do not sell short and do not use ________ orders - ✔✔stop
selling short means: you are hoping the price of shares will decline. you borrow stocks,
sell it, and hope to buy it back at a lower price
stop orders can lead to unexpected losses caused by electronic malfunctions or
unexpected volatility in a stock's price
✔✔Is reinvesting dividends way of compounding growth? - ✔✔Yes
✔✔What is the size/market cap of a company? - ✔✔Calculated by multiplying the
market price of one share of stock by total # of shares
✔✔If stock options are not exercised before expiration date, what happens? - ✔✔the
option terminates
✔✔Are profits from options and restricted stock units subject to taxes? - ✔✔
✔✔Are exchange traded funds always well diversified? - ✔✔
✔✔growth investor vs value investor vs dividend investor - ✔✔growth investor: investor
looking for strong companies to grow their sales and earnings by 15% a year; buy
stocks that are not currently popular but looking ahead to next 6 to 18 months
value investor: investor looking for stocks which have stumbled and whose shares are
at "bargain" prices. broken stocks
dividend investor: investor wanting income more than growth; focus on stocks that pay
above average dividends (good dividends)
, ✔✔What is the bid in a stock context? - ✔✔Highest price buyer will pay at that time
✔✔What is the ask in a stock context? - ✔✔Lowest price the seller is willing to sell
✔✔How often should you reallocate your portfolio? - ✔✔
✔✔Professional managers paid to outperform the index - ✔✔
✔✔T/F: Hold extra cash when there is too much risk in market. - ✔✔T
✔✔Trends (pg. 117-118) - ✔✔-may be the most important thing you do in investing
-look ahead for 6-18 months
Trends:
-emerging market growth :: recognize accelerating growth rate of emerging economies
& slowing growth rate of many developed economies
-rising inflation and rising interest rates :: inflation -> higher int rates -> price of market
bonds decreases
-the world is getting older :: birth rates are declining. fewer young people to support
needs of elders -> increased demand for medical care, social services, etc.
-raw materials are in more remote and hard to reach areas
-more people have higher incomes
-environmental needs :: clean water. converting use of coal and natural gas. includes
protecting populations from nuclear disasters, pollution, and rising sea levels
✔✔How much do stock options cost when granted? - ✔✔The options are free and there
is no taxable event as long as the options are not exercised (converted to stock)
✔✔Executing buy/sell (pg. 101) - 4 q - ✔✔not sure what to include here
-author recommends using limit orders for all trades
-does not recommend selling short
✔✔current yield vs coupon yield vs yield to maturity - ✔✔yield:: return earned by an
investment in bonds
current yield: annual interest payment divided by the market price of the bond
coupon yield: fixed percentage rate of interest based upon par value of the bond. does
not change with price of bond
yield to maturity: tells you how much you will be paid in the future if you hold the bond to
maturity; sum of all cash flows from both coupons and payment of principal. calculated
by:: AGI / smth will finish later
AND ANSWERS SURE A+
✔✔Do not sell short and do not use ________ orders - ✔✔stop
selling short means: you are hoping the price of shares will decline. you borrow stocks,
sell it, and hope to buy it back at a lower price
stop orders can lead to unexpected losses caused by electronic malfunctions or
unexpected volatility in a stock's price
✔✔Is reinvesting dividends way of compounding growth? - ✔✔Yes
✔✔What is the size/market cap of a company? - ✔✔Calculated by multiplying the
market price of one share of stock by total # of shares
✔✔If stock options are not exercised before expiration date, what happens? - ✔✔the
option terminates
✔✔Are profits from options and restricted stock units subject to taxes? - ✔✔
✔✔Are exchange traded funds always well diversified? - ✔✔
✔✔growth investor vs value investor vs dividend investor - ✔✔growth investor: investor
looking for strong companies to grow their sales and earnings by 15% a year; buy
stocks that are not currently popular but looking ahead to next 6 to 18 months
value investor: investor looking for stocks which have stumbled and whose shares are
at "bargain" prices. broken stocks
dividend investor: investor wanting income more than growth; focus on stocks that pay
above average dividends (good dividends)
, ✔✔What is the bid in a stock context? - ✔✔Highest price buyer will pay at that time
✔✔What is the ask in a stock context? - ✔✔Lowest price the seller is willing to sell
✔✔How often should you reallocate your portfolio? - ✔✔
✔✔Professional managers paid to outperform the index - ✔✔
✔✔T/F: Hold extra cash when there is too much risk in market. - ✔✔T
✔✔Trends (pg. 117-118) - ✔✔-may be the most important thing you do in investing
-look ahead for 6-18 months
Trends:
-emerging market growth :: recognize accelerating growth rate of emerging economies
& slowing growth rate of many developed economies
-rising inflation and rising interest rates :: inflation -> higher int rates -> price of market
bonds decreases
-the world is getting older :: birth rates are declining. fewer young people to support
needs of elders -> increased demand for medical care, social services, etc.
-raw materials are in more remote and hard to reach areas
-more people have higher incomes
-environmental needs :: clean water. converting use of coal and natural gas. includes
protecting populations from nuclear disasters, pollution, and rising sea levels
✔✔How much do stock options cost when granted? - ✔✔The options are free and there
is no taxable event as long as the options are not exercised (converted to stock)
✔✔Executing buy/sell (pg. 101) - 4 q - ✔✔not sure what to include here
-author recommends using limit orders for all trades
-does not recommend selling short
✔✔current yield vs coupon yield vs yield to maturity - ✔✔yield:: return earned by an
investment in bonds
current yield: annual interest payment divided by the market price of the bond
coupon yield: fixed percentage rate of interest based upon par value of the bond. does
not change with price of bond
yield to maturity: tells you how much you will be paid in the future if you hold the bond to
maturity; sum of all cash flows from both coupons and payment of principal. calculated
by:: AGI / smth will finish later
