Question 13

Diversification ____ risk, and leverage ____ risk.

	A.	increases; decreases
	B.	decreases; increases
	C.	increases; increases
	D.	decreases; decreases

Question 14

People invest to

	A.	all of these.
	B.	gain wealth and a feeling of financial security.
	C.	achieve financial goals.
	D.	increase current income.

Question 15

____ is an example of an ownership investment.

	A.	Corporate bonds
	B.	Common corporate stock
	C.	Treasury Bills
	D.	Mortgage-backed bonds

Question 16

Using borrowed funds to make an investment is called

	A.	hedging.
	B.	liquidity.
	C.	diversification.
	D.	leverage.

Question 17

You can accept ____ risk when investing for long-term goals.

	A.	less
	B.	no
	C.	unlimited
	D.	more

Question 18

Rank the following investments from highest to lowest in terms of their long-term rates of return:

1.	Government bonds
2.	Small company stocks
3.	Large company stocks
4.	Corporate bonds

	A.	3, 2, 1, 4
	B.	2, 3, 1, 4
	C.	1, 2, 3, 4
	D.	2, 3, 4, 1

Question 19

Shares in the ownership of a corporation are called

	A.	bonds.
	B.	mutual funds.
	C.	a portfolio.
	D.	stocks.

Question 20

Selling shares of stock for more than you originally paid is called

	A.	modern portfolio theory.
	B.	leverage.
	C.	capital gain.
	D.	current income.