4/5/2020 Practice Tests

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Chapter 8: Saving and Investing

Practice Tests
Results Reporter
Out of 10 questions, you answered 1 correctly with a final grade of 10%
1 correct (10%)
9 incorrect (90%)
0 unanswered (0%)

Your Results:
The correct answer for each question is indicated by a .

1 Profits that a company reinvests are called _______.

INCORRECT
A) dividends

B) retained earnings

C) equity capital

D) common stock
Feedback: See p. 249
2 CORRECT _______ is the ability to buy or sell an investment quickly without substantially reducing its value.

A) investment liquidity

B) speculative investment

C) time value of money

D) equity capital
3 When you pay yourself first, you _______.
INCORRECT
A) pay your bills before spending money on personal pleasures

B) put money in savings before paying your bills

C) spend money on personal pleasures before paying your bills

D) put your money in high-risk investments in order to have more to spend on yourself
Feedback: See p. 239
4 A(n) _______ is a type of stock that gives the owner the advantage of receiving cash dividends before
INCORRECT common stockholders.
A) corporate bond

B) preferred stock

C) mutual fund

D) equity capital
Feedback: See p. 250

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4/5/2020 Practice Tests
5 A company's written pledge to repay a specific amount of money, along with interest, is a _______.
INCORRECT
A) preferred stock

B) common stock

C) corporate bond

D) government bond
Feedback: See p. 251
6 A corporation gets its equity capital from _______.
INCORRECT
A) the government

B) stockholders

C) the bank

D) the sole proprietor

Feedback: See p. 250
7 _______ companies usually reinvest their profits rather than pay dividends.
INCORRECT
A) international

B) failing

C) sole proprietorship

D) growth
Feedback: See p. 249
8 _______ is a method of reducing investment risk.
INCORRECT
A) speculative investment

B) diversification

C) investment liquidity

D) capital gains
Feedback: See p. 254
9 Profit from the sale of assets such as stocks, bonds, or real estate is called _______.
INCORRECT
A) equity capital

B) tax-exempt income

C) capital gain

D) tax-deferred income
Feedback: See p. 261
10 A collection of baseball cards would be placed in an investment pyramid chart on _______.
INCORRECT
A) Level 1

B) Level 2

C) Level 3

D) Level 4
Feedback: See p. 254

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