Finance Chapter 16 Quiz

Bond Quality = Assessment of a bond's reliability and creditworthiness Liquidity, = Ability to quickly convert an asset into cash Default Risk = Possibility that a bond issuer will fail to make payments Maturity Risk = Increased risk related to the time remaining until a bond matures

Load Mutual Fund = Charged a commission on purchase No-Load Mutual Fund = No commission fees for purchases Closed-End Mutual Fund = Fixed number of shares that trade like stocks Open-End Mutual Fund = Shares can be bought or sold at any time

Preferred Stock = Equity with fixed dividends Common Stock = Equity that represents ownership in a company Dividend Discount Model = Valuation method based on expected future dividends Price-Earnings (P/E) Multiple Method = Valuation ratio calculated by dividing share price by earnings

<p>Discount Bond = Sold for less than its face value Premium Bond = Sold for more than its face value Coupon Payments = Regular interest payments made to bondholders Yield to Maturity = Total return anticipated on a bond if held until it matures</p> Signup and view all the answers

<p>Fundamental Analysis = Evaluating securities by analyzing financial statements Technical Analysis = Analyzing statistical trends from trading activity Momentum Investing = Investing based on recent price trends Separately Managed Accounts = Customized investment accounts managed by professionals</p> Signup and view all the answers

<p>default risk = Risk that a bond issuer will fail to make principal or interest payments liquidity risk = Risk of not being able to sell an investment quickly without a substantial price reduction maturity risk = Risk associated with the change in interest rates over the life of a bond reinvestment risk = Risk of having to reinvest cash flows at lower interest rates than the original investment</p> Signup and view all the answers

<p>open-end mutual fund = A fund that can issue an unlimited number of shares closed-end mutual fund = A fund that has a fixed number of shares and trades on an exchange load mutual fund = A fund that charges a commission or sales charge upon purchase no-load mutual fund = A fund that does not charge any sales commission to investors</p> Signup and view all the answers

<p>preferred stock = A type of stock that typically provides fixed dividends dividend discount model = A valuation method based on the present value of expected future dividends price-earnings (P/E) multiple = A ratio used to value a company by comparing its current share price to its earnings per share momentum investing = An investment strategy that involves buying securities that have been rising in price</p> Signup and view all the answers

<p>coupon payments = Periodic interest payments made to bondholders discount bond = A bond that sells for less than its face value premium bond = A bond that sells for more than its face value yield to maturity = The total return anticipated on a bond if it is held until it matures</p> Signup and view all the answers

<p>fundamental analysis = Method focused on evaluating a security's intrinsic value technical analysis = Method that uses historical price movements and patterns to forecast future price movements momentum investing = Investment strategy based on trends of price movements separately managed accounts = Investment accounts managed by a professional for individual clients</p> Signup and view all the answers

<p>Discount Bond = Sold for less than its face value Premium Bond = Sold for more than its face value Coupon Payments = Periodic interest payments made to bondholders Yield to Maturity = Total return anticipated on a bond if held until it matures</p> Signup and view all the answers

<p>Closed-end Mutual Fund = Shares are traded on the open market Exchange-traded Funds (ETFs) = Invest in a diverse basket of assets and trade like stocks No-load Mutual Fund = No sales charge for purchasing shares Open-end Mutual Fund = Shares are bought and sold at the fund's current net asset value</p> Signup and view all the answers

<p>Common Stock = Represents ownership in a company with voting rights Preferred Stock = Has priority on dividends but usually no voting rights Dividend Discount Model = Valuation model based on future dividend payments Price-Earnings (P/E) Ratio = Valuation measure comparing a company’s current share price to its earnings per share</p> Signup and view all the answers

<p>Momentum Investing = Focuses on stocks that are trending upwards Fundamental Analysis = Evaluates a security's intrinsic value through economic data Technical Analysis = Analyzes statistics generated by market activity Separately Managed Accounts = Investment portfolios managed individually for clients</p> Signup and view all the answers

<p>Liquidity Risk = Risk of not being able to sell an investment quickly Reinvestment Risk = Risk that interest income will have to be reinvested at lower rates Default Risk = Risk that a borrower will not repay a loan Maturity Risk = Risk associated with changes in interest rates as bonds approach maturity</p> Signup and view all the answers