Pretest

Question 1

Which best describes what generally occurs in financial markets?

Revolt · Accepted Answer

Assets are traded.

Question 2

Which best describes how an investor makes money from an equity investment?

Revolt · Accepted Answer

by selling the asset for a profit

Question 3

Bonds are considered to offer a guaranteed return, as they must be honored by law, but which is still a potential risk that investors face?

Revolt · Accepted Answer

The issuer could go bankrupt.

Question 4

Which statement best describes how an investor makes money off debt?

Revolt · Accepted Answer

An investor makes money by earning interest.

Question 5

How do bonds generate income for investors?

Revolt · Accepted Answer

Bonds pay a specified amount to the investor at maturity.

Question 6

Which is true about investments and risk?

Revolt · Accepted Answer

Every investment carries some degree of risk.

Question 7

Which types of investments are securities?

Revolt · Accepted Answer

both debt and equity

Question 8

What can be traded in a commodities market?

Revolt · Accepted Answer

oil

Question 9

Capital appreciation refers to

Revolt · Accepted Answer

the increased value of an asset.

Question 10

If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?

Revolt · Accepted Answer

No, the payment of dividends indicates that a company has earned profits.

Pretest Answers