Business and Personal Finance © 2007

Chapter 8: Saving and Investing

Practice Tests

1
Profits that a company reinvests are called _______.
A)dividends
B)retained earnings
C)equity capital
D)common stock
2
_______ 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 _______.
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
4
A(n) _______ is a type of stock that gives the owner the advantage of receiving cash dividends before common stockholders.
A)corporate bond
B)preferred stock
C)mutual fund
D)equity capital
5
A company's written pledge to repay a specific amount of money, along with interest, is a _______.
A)preferred stock
B)common stock
C)corporate bond
D)government bond
6
A corporation gets its equity capital from _______.
A)the government
B)stockholders
C)the bank
D)the sole proprietor
7
_______ companies usually reinvest their profits rather than pay dividends.
A)international
B)failing
C)sole proprietorship
D)growth
8
_______ is a method of reducing investment risk.
A)speculative investment
B)diversification
C)investment liquidity
D)capital gains
9
Profit from the sale of assets such as stocks, bonds, or real estate is called _______.
A)equity capital
B)tax-exempt income
C)capital gain
D)tax-deferred income
10
A collection of baseball cards would be placed in an investment pyramid chart on _______.
A)Level 1
B)Level 2
C)Level 3
D)Level 4
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