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What kinds of companies typically sell over-the-counter (OTC) stocks?
smaller, riskier companies
OTC stocks aren't listed on an exchange and generally are offered by smaller, riskier companies. Usually, an OTC stock is stock in a company that doesn't meet the requirements of an exchange.
bigger, safer companies
Which of the following refers to a particular exchange where investors can buy and sell stock?
NASDAQ, or the National Association of Securities Dealers Automated Quotations System, is a place where people go to buy and sell shares of stock. This is not the same as the NASDAQ composite index, which tracks approximately 4,000 stocks.
neither of the above
What do you call a market experiencing declining stock prices and higher unemployment?
a bull market
a bear market
A bear market is a declining market, usually beginning with a sharp drop in stock prices across the board. In a bear market, the economy tends to be weak. Unemployment increases and consumers spend less, which results in lower business profits.
a black market
What does "load" refer to in terms of mutual funds?
the percentage of your investments are considered low-yield and low-risk
the percentage of your investments are considered risky or "junk"
the sales charges added to a mutual fund when you purchase it
Load refers to the sales charges added to a mutual fund when you purchase it. It's a commission to the salesperson. Load charges can be up to 8.5 percent of the selling price. Some mutual funds are no-load funds, however.
Which of the following plans doesn't involve paying taxes upon withdrawal of the funds?
Because you invest your money into a Roth IRA after taxes, you don't have to pay taxes on the earnings upon withdrawal of the funds at or after the maturity date. This is different from other types of IRAs, 401(k)s, or 403(b)s where you'll pay taxes when you withdraw funds.
Bonds are essentially:
a share of ownership in a company
a loan to a company
Whereas stocks represent partial ownership of a company, bonds are simply loans.
both of the above
When must you start withdrawing funds with a traditional IRA?
by age 59.5
by age 70.5
Contributors must start withdrawing funds by age 70.5. The funds withdrawn will be taxed as ordinary income.
never -- there is no requirement.
What is the most popular precious metal to invest in?
Gold is by far the most popular because of its consistently rising value since 2001, especially as the U.S. dollar weakens.
In the 1980s, what did companies use to fund hostile takeovers?
With junk bonds, an acquiring company could borrow serious cash with little or no assets and use it to bid on another unwilling company. Believing that a change in management would make these targets more profitable, the acquiring company would then use the newly acquired assets to repay the debt it incurred to fund the takeover.
pump and dump schemes
A popular investment scam that entails paying initial investors with the funds provided by later investors is called what?
promissory note scam
prime bank scam
Charles Ponzi scammed others into investing in "International Postal Reply Coupons." In this scheme, he took investors' money and dealt out small payments to earlier investors.