21st Century Student FinLit -Getting Personal SW

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Are You Financially Literate? Chapter 11 Quiz 1. Explain what a diversified investment portfolio is and why it is superior to a portfolio concentrated in a single type of investment or industry. _ ____________________________________________________________________ _ ____________________________________________________________________ _ ____________________________________________________________________ _ ____________________________________________________________________ 2. Hwang purchased a house for $110,000. He planned to own it for several years while waiting for the local real estate values to appreciate. After five years, Hwang sold it for $150,000. What was Hwang’s return on investment (ROI)? _ ____________________________________________________________________ 3. Shaun has saved $10,000. He has several long term financial goals, but he’s uncomfortable with financial risk. He needs help aligning his financial goals, time frames and acceptable risk levels in order to select appropriate investments. Where can he get advice? a. a crystal ball b. his cousin Angelo who dabbles in the stock market. c. a qualified and reputable investment advisor d. a stock broker 4. Equities refers to: a. bonds c. corporate stock b. debentures d. dividends 5. Which of the following is NOT true about state and municipal bonds? a. they are used to raise capital for public works like libraries, sewers and schools b. they can be defaulted on c. they can only be purchased by people who live in the state or city that issued them d. they pay interest called a coupon rate 6. There are two types of stocks: common and preferred. Explain the differences: _ ____________________________________________________________________ _ ____________________________________________________________________ _ ____________________________________________________________________ PRODUCT PREVIEW

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Chapter 11 | Investing 101 214

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