Finance Test 3 - Chapter 11, 12, 13, 14
LATEST UPDATES!!! 2026-2027 |
CORRECT SOLUTIONS WITH QUIZ &
ANSWERS | HIGHLY GRADED A+
what are the two kinds of investments? - CORRECT ANSWERS-ownership investments
- stocks
lending investments - bonds
components of bonds & stocks - CORRECT ANSWERS-components:
coupon rate, par value, yield to maturity
dividends (income return) & capital gains/loss (appreciation)
systematic risk (BETA!!) - CORRECT ANSWERS-portion of a security's risk or
variability that cannot be eliminated through diversification. You are compensated for
this risk!
unsystematic risk - CORRECT ANSWERS-risk or variability that can be eliminated with
diversification. You are not compensated for keeping this risk.
Asset Allocation - CORRECT ANSWERS-is an investment term that
deals with how your money should be
divided among stocks, bonds and other
investments.
Style Drift & Rebalancing Your Portfolio - CORRECT ANSWERS-deals with your
investment manager altering the way your investments are set up in your portfolio.
(includes stocks, bonds and others).
If it changes too much, it can be risky, so investors need to REBALANCE their
portfolio.to keep the percentage of your investments aligned with your financial goals.
Efficient Market Hypothesis - CORRECT ANSWERS-suggests that markets are
"efficient" meaning that the price you see today (of a stock) reflects all of the information
available, and that attempt to beat the market (that is... to find a mispriced stock) is a
game of chance, and not skill.
, Info is released to public almost immediately.
As a result an investor can consistently beat the
market only with the best of luck. They can never fully beat the market.
Believers of EMH - CORRECT ANSWERS-these ppl build portfolios using passive
investment vehicles such as index/passive asset
funds and they stick with their long term
allocations, engaging in no stock picking or market timing activities.
ACTIVE investing - CORRECT ANSWERS-is a strategy investors use when trying to
beat a market or appropriate =benchmark. Active investors rely on speculation about
short-term future market movements. They are less concerned about historical data.
efficient market - CORRECT ANSWERS-is a market in which all relevant information
about the stock is reflected in the stock price.
coupon interest rate - CORRECT ANSWERS-the actual rate of return the bond pays.
Most are fixed rates and are paid throughout the life of the bond until it "matures."
Stock Market Index - CORRECT ANSWERS-A measure of the performance of a group
of stocks that represent the market or a sector of the market.
Ways to Valuate a Single Common Stock - CORRECT ANSWERS-1. fundamental
analysis
2. technical analysis
3. P/E Ratio
4. SWOT analysis
Types of Stock Market Indexes - CORRECT ANSWERS-1) Dow Jones Industrial
Average
2) S&P 500 (Standard & Poor's)
3) Russel 1000
4) Russel 2000
5) Wilshire 5000
Dow Jones Industrial Average - CORRECT ANSWERS-This stock market index is used
for an indicator of how well stocks are done. This index is composed of stock prices of
30 large industrial firms, **representing over 25% of NYSE.
Standard & Poor's 500 - CORRECT ANSWERS-Another commonly used index for
stocks. This is based on the movement of 500 stocks, primarily from the NYSE.
*better representation of the market than Dow.
LATEST UPDATES!!! 2026-2027 |
CORRECT SOLUTIONS WITH QUIZ &
ANSWERS | HIGHLY GRADED A+
what are the two kinds of investments? - CORRECT ANSWERS-ownership investments
- stocks
lending investments - bonds
components of bonds & stocks - CORRECT ANSWERS-components:
coupon rate, par value, yield to maturity
dividends (income return) & capital gains/loss (appreciation)
systematic risk (BETA!!) - CORRECT ANSWERS-portion of a security's risk or
variability that cannot be eliminated through diversification. You are compensated for
this risk!
unsystematic risk - CORRECT ANSWERS-risk or variability that can be eliminated with
diversification. You are not compensated for keeping this risk.
Asset Allocation - CORRECT ANSWERS-is an investment term that
deals with how your money should be
divided among stocks, bonds and other
investments.
Style Drift & Rebalancing Your Portfolio - CORRECT ANSWERS-deals with your
investment manager altering the way your investments are set up in your portfolio.
(includes stocks, bonds and others).
If it changes too much, it can be risky, so investors need to REBALANCE their
portfolio.to keep the percentage of your investments aligned with your financial goals.
Efficient Market Hypothesis - CORRECT ANSWERS-suggests that markets are
"efficient" meaning that the price you see today (of a stock) reflects all of the information
available, and that attempt to beat the market (that is... to find a mispriced stock) is a
game of chance, and not skill.
, Info is released to public almost immediately.
As a result an investor can consistently beat the
market only with the best of luck. They can never fully beat the market.
Believers of EMH - CORRECT ANSWERS-these ppl build portfolios using passive
investment vehicles such as index/passive asset
funds and they stick with their long term
allocations, engaging in no stock picking or market timing activities.
ACTIVE investing - CORRECT ANSWERS-is a strategy investors use when trying to
beat a market or appropriate =benchmark. Active investors rely on speculation about
short-term future market movements. They are less concerned about historical data.
efficient market - CORRECT ANSWERS-is a market in which all relevant information
about the stock is reflected in the stock price.
coupon interest rate - CORRECT ANSWERS-the actual rate of return the bond pays.
Most are fixed rates and are paid throughout the life of the bond until it "matures."
Stock Market Index - CORRECT ANSWERS-A measure of the performance of a group
of stocks that represent the market or a sector of the market.
Ways to Valuate a Single Common Stock - CORRECT ANSWERS-1. fundamental
analysis
2. technical analysis
3. P/E Ratio
4. SWOT analysis
Types of Stock Market Indexes - CORRECT ANSWERS-1) Dow Jones Industrial
Average
2) S&P 500 (Standard & Poor's)
3) Russel 1000
4) Russel 2000
5) Wilshire 5000
Dow Jones Industrial Average - CORRECT ANSWERS-This stock market index is used
for an indicator of how well stocks are done. This index is composed of stock prices of
30 large industrial firms, **representing over 25% of NYSE.
Standard & Poor's 500 - CORRECT ANSWERS-Another commonly used index for
stocks. This is based on the movement of 500 stocks, primarily from the NYSE.
*better representation of the market than Dow.
