5-09 Chapter 5

If you have two stocks, one gaining value and the other losing, what should your first reaction be?

	Sell the winner to lock in profit, hold the loser until it regains value
	Sell the loser and buy more of the winner
	Sell the loser and start researching other stocks

If your stock falls by 20%, how much gains do you need to break even?

	Less than 20%
	Exactly 20%
	More than 20%

If your stock rises by 50%, how much more gains do you need to double your original investment?

	Less than 50%
	Exactly 50%
	More than 50%

True or False - Investing requires patience with underperforming stocks, investors should not be too quick to sell off immediately

	TRUE
	FALSE

If your limit-sell price triggers, but you see the stock's price is still rising, you should.

	Buy more of this stock
	Short sell the stock because it is over-valued
	Nothing for at least a few days

If your stop sell price triggers, but you see the stock's price looks to be in a trough and starting to recover, you should

	Buy low - buy the stock back immediately so it returns to your portfolio
	Assume it is a temporary recovery and short sell the stock
	Nothing for at least a few days

When looking back at stock sells done in the heat of the moment, most investors think

	They should have sold
	They should have held on to the stock longer
	About even opinions

True or False - Stock investing is all about "Buying What You Know" and "Buy and Hold" strategies - showing loyalty to the stocks you buy usually pays off in the long run.

	TRUE
	FALSE

True or False - Investing is like gambling - gains and losses often come down to luck.

	TRUE
	FALSE

Capital Preservation means

	The need to grow your original investment
	The need to not lose your original investment
	The need to not lose your gains

Most investment advisors recommend trailing stop orders be set at

	2-3%
	5-7%
	8-10%
	15-20%

True or False - Exchange Traded Funds are a good way to diversify a portfolio

	TRUE
	FALSE

The principle of "Stock Diversification" means

	Owning many stocks
	Owning multiple stocks in the same sector
	Owning stocks across many different sectors
	All of the above

Which of the following is an example of Sector Diversification?

	Owning 1 stock in 5 different sectors each
	Investing in a sector-based ETF
	Owning stocks in multiple industries in the same sector
	All of the above

For a beginner's portfolio, which of the following is probably over-diversified?

	Owning 30 individual stocks
	Owning 10 different sector ETFs, each of which owns hundreds of stocks
	Owning 5 index mutual funds that are spread across entire stock indexes
	None of the above

At what point should you be ready to sell a stock?

	When it triggers your stop orders
	If it is not underperforming, but it is not performing its original role in your portfolio
	When other stocks in the same sector are seriously out-performing it
	All of the above

What is a "Market Top"?

	When a stock's price starts to reach its short-term peak
	When the market as a whole starts to reach its short-term peak
	When your returns are "on top" of the overall market returns
	When analysts as a whole predict a bubble

If volume is slowly increasing as the price goes up, it means

	Market sentiment is growing
	Market sentiment is falling
	It may be a mania
	It may be a crash

If the volume is suddenly increasing, and price is going up

	Market sentiment is growing
	Market sentiment is falling
	It may be a mania
	It may be a crash

Which of the following is the best way to stick to an exit strategy?

	Trailing stop orders
	Limit buy orders
	Checking your portfolio daily
	"Buy and Hold" - do not plan to sell