CHAPTER 13 - INVESTMENT
FUNDAMENTALS QUESTIONS WITH
CORRECT ANSWERS 2025
TotalKReturnK-KcorrectKanswer-incomeKanKinvestmentKgeneratesKfromKcurrentKincomeKandKcapitalKgains
CurrentKIncomeK-KcorrectKanswer-
moneyKreceivedKwhileKyouKownKanKinvestment;KusuallyKreceivedKregularlyKasKinterest,Krent,KorKdividends
DividendK-KcorrectKanswer-aKportionKofKaKcompany'sKearningsKthatKisKpaidKtoKstockholders
CapitalKGainsK-KcorrectKanswer-
increaseKinKtheKvalueKofKanKinitialKinvestmentK(lessKcosts)KrealizedKuponKtheKsaleKofKtheKinvestment
CapitalKLossK-KcorrectKanswer-decreaseKinKpaperKvalueKofKanKinitialKinvestment;KonlyKrealizedKifKsold
RateKofKReturn/YieldK-KcorrectKanswer-
totalKreturnKonKanKinvestmentKexpressedKasKaKpercentageKofKitsKprice
SeculativeKRiskK-KcorrectKanswer-
involvesKtheKpotentialKforKeitherKgainKorKloss;KequityKinvestmentsKmightKdoKeither
InvestmentKRiskK-KcorrectKanswer-
theKpossibilityKthatKtheKyieldKonKanKinvestmentKwillKdeviateKfromKitsKexpectedKreturn
T-BillK-KcorrectKanswer-aKgovernmentKIOUKofKlessKthanKoneKyear
RiskKPremiumK(EquityKRiskKPremium)K-KcorrectKanswer-
theKdifferenceKbetweenKaKriskierKinvestment'sKexpectedKreturnKandKtheKtotallyKsafeKreturnKonKtheKT-bill
, RiskKToleranceK-KcorrectKanswer-
anKinvestor'sKwillingnessKtoKweatherKchangesKinKtheKvalueKofKyourKinvestments,KthatKis,KtoKweatherKinvest
mentKrisk
InvestmentKPhilosophyK-KcorrectKanswer-
Investor'sKgeneralKapproachKtoKtoleranceKforKriskKinKinvestments,KwhetherKitKisKconservative,Kmoderate,Kor
Kaggressive,KgivenKtheKinvestor'sKfinancialKgoals
ConservativeKInvestmentKPhilosophyK(RiskKAversion)K-KcorrectKanswer-
investorsKwithKthisKphilosophyKacceptKveryKlittleKriskKandKareKgenerallyKrewardedKwithKrelativelyKlowKratesK
ofKreturnKforKseekingKtheKtwinKgoalsKofKaKmoderateKamountKofKcurrentKincomeKandKpreservationKofKcapital
ModerateKInvestmentKPhilosophyK(RiskKIndifference)K-KcorrectKanswer-
investorsKwithKthisKphilosophyKacceptKsomeKriskKasKtheyKseekKcapitalKgainsKthroughKslowKandKsteadyKgrowt
hKinKinvestmentKvalueKalongKwithKcurrentKincome
AggressiveKInvestmentKPhilosophyK(RiskKSeeker)K-KcorrectKanswer-
investorsKwithKthisKphilosophyKprimarilyKseekKcapitalKgains,KoftenKwithKaKshortKtimeKhorizon
DebtsK-KcorrectKanswer-lendingKinvestmentsKthatKtypicallyKofferKbothKaKfixedKmaturityKandKaKfixedKincome
FixedKMaturityK-KcorrectKanswer-
specificKdateKonKwhichKaKborrowerKagreesKtoKrepayKtheKprincipalKtoKtheKinvestor
FixedKIncomeK-KcorrectKanswer-
specificKrateKofKreturnKthatKaKborrowerKagreesKtoKpayKtheKinvestorKforKuseKofKtheKprincipalK(initialKinvestme
nt)
EquitiesK-KcorrectKanswer-
ownershipKequitiesKsuchKasKcommonKorKpreferredKstocks,KequityKmutualKfunds,KrealKestate,KandKsoKonKthat
KfocusKonKcapitalKgainsKmoreKthanKonKincome
RealKRateKofKReturnK-KcorrectKanswer-
returnKonKanKinvestmentKafterKsubtractingKtheKeffectsKofKinflationKandKincomeKtaxes
FUNDAMENTALS QUESTIONS WITH
CORRECT ANSWERS 2025
TotalKReturnK-KcorrectKanswer-incomeKanKinvestmentKgeneratesKfromKcurrentKincomeKandKcapitalKgains
CurrentKIncomeK-KcorrectKanswer-
moneyKreceivedKwhileKyouKownKanKinvestment;KusuallyKreceivedKregularlyKasKinterest,Krent,KorKdividends
DividendK-KcorrectKanswer-aKportionKofKaKcompany'sKearningsKthatKisKpaidKtoKstockholders
CapitalKGainsK-KcorrectKanswer-
increaseKinKtheKvalueKofKanKinitialKinvestmentK(lessKcosts)KrealizedKuponKtheKsaleKofKtheKinvestment
CapitalKLossK-KcorrectKanswer-decreaseKinKpaperKvalueKofKanKinitialKinvestment;KonlyKrealizedKifKsold
RateKofKReturn/YieldK-KcorrectKanswer-
totalKreturnKonKanKinvestmentKexpressedKasKaKpercentageKofKitsKprice
SeculativeKRiskK-KcorrectKanswer-
involvesKtheKpotentialKforKeitherKgainKorKloss;KequityKinvestmentsKmightKdoKeither
InvestmentKRiskK-KcorrectKanswer-
theKpossibilityKthatKtheKyieldKonKanKinvestmentKwillKdeviateKfromKitsKexpectedKreturn
T-BillK-KcorrectKanswer-aKgovernmentKIOUKofKlessKthanKoneKyear
RiskKPremiumK(EquityKRiskKPremium)K-KcorrectKanswer-
theKdifferenceKbetweenKaKriskierKinvestment'sKexpectedKreturnKandKtheKtotallyKsafeKreturnKonKtheKT-bill
, RiskKToleranceK-KcorrectKanswer-
anKinvestor'sKwillingnessKtoKweatherKchangesKinKtheKvalueKofKyourKinvestments,KthatKis,KtoKweatherKinvest
mentKrisk
InvestmentKPhilosophyK-KcorrectKanswer-
Investor'sKgeneralKapproachKtoKtoleranceKforKriskKinKinvestments,KwhetherKitKisKconservative,Kmoderate,Kor
Kaggressive,KgivenKtheKinvestor'sKfinancialKgoals
ConservativeKInvestmentKPhilosophyK(RiskKAversion)K-KcorrectKanswer-
investorsKwithKthisKphilosophyKacceptKveryKlittleKriskKandKareKgenerallyKrewardedKwithKrelativelyKlowKratesK
ofKreturnKforKseekingKtheKtwinKgoalsKofKaKmoderateKamountKofKcurrentKincomeKandKpreservationKofKcapital
ModerateKInvestmentKPhilosophyK(RiskKIndifference)K-KcorrectKanswer-
investorsKwithKthisKphilosophyKacceptKsomeKriskKasKtheyKseekKcapitalKgainsKthroughKslowKandKsteadyKgrowt
hKinKinvestmentKvalueKalongKwithKcurrentKincome
AggressiveKInvestmentKPhilosophyK(RiskKSeeker)K-KcorrectKanswer-
investorsKwithKthisKphilosophyKprimarilyKseekKcapitalKgains,KoftenKwithKaKshortKtimeKhorizon
DebtsK-KcorrectKanswer-lendingKinvestmentsKthatKtypicallyKofferKbothKaKfixedKmaturityKandKaKfixedKincome
FixedKMaturityK-KcorrectKanswer-
specificKdateKonKwhichKaKborrowerKagreesKtoKrepayKtheKprincipalKtoKtheKinvestor
FixedKIncomeK-KcorrectKanswer-
specificKrateKofKreturnKthatKaKborrowerKagreesKtoKpayKtheKinvestorKforKuseKofKtheKprincipalK(initialKinvestme
nt)
EquitiesK-KcorrectKanswer-
ownershipKequitiesKsuchKasKcommonKorKpreferredKstocks,KequityKmutualKfunds,KrealKestate,KandKsoKonKthat
KfocusKonKcapitalKgainsKmoreKthanKonKincome
RealKRateKofKReturnK-KcorrectKanswer-
returnKonKanKinvestmentKafterKsubtractingKtheKeffectsKofKinflationKandKincomeKtaxes