FIN 201: CHAPTER 13 - INVESTING
FUNDAMENTALS QUESTIONS WITH
CORRECT ANSWERS 2024-2025
WhatRisRsafetyRinRanyRinvestment?R-RcorrectRanswer-MinimalRriskRofRloss
WhatRisRRISKRinRtermsRofRinvesting?R-RcorrectRanswer-UncertaintyRaboutRtheRoutcomeRofRtheRinvestment
(PotentialRreturnRonRanyRinvestmentRaughtRtoRbeRdirectlyRrelatedRtoRtheRriskRtheRinvestorRassumes.)
WhatRkindRofRinvestmentsRareRaRveryRhighRrisk?R-RcorrectRanswer-SpeculativeRinvestments
WhatRareRtheRlevelsRofRtheRInvestmentRPyramid?R-RcorrectRanswer-1R-
RFinancialRSecurityR(Cash,RCD's,RMoneyRMarketRFunds,RU.S.RGovRbonds.
2 R-
RSafetyRandRIncomeR(U.S.RSecurities,RspecificRcorporate/municipalRbonds,RincomeRstocks,RconservativeRmu
tualRfunds)
3R-RGrowthR(GrowthRstocks,Rgrowth-orientedRmutualRfunds,RrentalRproperty)
4R-RSpeculationR(SpeculativeRStocks,Roptions,Rcommodities,RhighRriskRinvestments.
TheRFirstRlevelRisRtheRbroadestRandRgetsRsmallerRtheRhigherRyouRgetRtoRtheRtop
ExplainRtheRRisk-ReturnRTradeRoffR-RcorrectRanswer-
WhenRengagingRhigherRriskRinvestments,RinvestorsRwillRexpectRaRhigherRreturn.
WhatRisRriskRtoleranceRbasedRon?R-RcorrectRanswer-AgeRandRWealthRlevel
HowRdoRyouRCalculateRtheRRateRofRReturnR(ROR)?R-RcorrectRanswer--
RSubtractRtheRinvestmentsRinitialRvalueRfromRtheRinvestmentsR
R endingRvalue
-RAddRtheRinvestmentRincomeRtoRtheRamountRcalculatedRabove
-RDivideRtheRnetRinvestmentRincomeRandRchangeRinRvalueRbyRtheR
R investment'sRinitialRvalue
FUNDAMENTALS QUESTIONS WITH
CORRECT ANSWERS 2024-2025
WhatRisRsafetyRinRanyRinvestment?R-RcorrectRanswer-MinimalRriskRofRloss
WhatRisRRISKRinRtermsRofRinvesting?R-RcorrectRanswer-UncertaintyRaboutRtheRoutcomeRofRtheRinvestment
(PotentialRreturnRonRanyRinvestmentRaughtRtoRbeRdirectlyRrelatedRtoRtheRriskRtheRinvestorRassumes.)
WhatRkindRofRinvestmentsRareRaRveryRhighRrisk?R-RcorrectRanswer-SpeculativeRinvestments
WhatRareRtheRlevelsRofRtheRInvestmentRPyramid?R-RcorrectRanswer-1R-
RFinancialRSecurityR(Cash,RCD's,RMoneyRMarketRFunds,RU.S.RGovRbonds.
2 R-
RSafetyRandRIncomeR(U.S.RSecurities,RspecificRcorporate/municipalRbonds,RincomeRstocks,RconservativeRmu
tualRfunds)
3R-RGrowthR(GrowthRstocks,Rgrowth-orientedRmutualRfunds,RrentalRproperty)
4R-RSpeculationR(SpeculativeRStocks,Roptions,Rcommodities,RhighRriskRinvestments.
TheRFirstRlevelRisRtheRbroadestRandRgetsRsmallerRtheRhigherRyouRgetRtoRtheRtop
ExplainRtheRRisk-ReturnRTradeRoffR-RcorrectRanswer-
WhenRengagingRhigherRriskRinvestments,RinvestorsRwillRexpectRaRhigherRreturn.
WhatRisRriskRtoleranceRbasedRon?R-RcorrectRanswer-AgeRandRWealthRlevel
HowRdoRyouRCalculateRtheRRateRofRReturnR(ROR)?R-RcorrectRanswer--
RSubtractRtheRinvestmentsRinitialRvalueRfromRtheRinvestmentsR
R endingRvalue
-RAddRtheRinvestmentRincomeRtoRtheRamountRcalculatedRabove
-RDivideRtheRnetRinvestmentRincomeRandRchangeRinRvalueRbyRtheR
R investment'sRinitialRvalue