Quiz – FINRA

If you buy a company's stock… A.You own a part of the company
B.You have lent money to the company
C.You are liable for the company's debts
D.The company will return your original investment to you with interest
E.Don't know/Not sure

If you buy a company's bond... A.You own a part of the company
B.You have lent money to the company
C.You are liable for the company's debts
D.You can vote on shareholder resolutions
E.Don't know/Not sure

Which type of bond is the safest? A.U.S. Treasury bond
B.Municipal bond
C.Corporate bond
D.Don't know/Not sure

In general, if interest rates go down, then bond prices… A.Go down
B.Go up
C.Are not affected
D.Don't know/Not sure

Which of the following is the best definition for a "junk bond?" A.A bond that is rated as "below investment-grade" by rating agencies
B.A bond that has declined dramatically in value
C.A bond that has defaulted
D.A bond that is not regulated
E.Don't know/Not sure

A "no-load" mutual fund is one that… A.Carries no fees
B.Carries no sales charges
C.Does not contain high-risk securities
D.Has no limits on the period of time in which it can be bought and sold
E.Don't know/Not sure

In general, investments that are riskier tend to provide higher returns over time than investments with less risk. A.True
B.False
C.Don't know/Not sure

Which of the following organizations insures you against your losses in the stock market? A.FDIC (Federal Deposit Insurance Corporation)
B.FINRA (Financial Industry Regulatory Authority)
C.SEC (Securities and Exchange Commission)
D.SIPC (Securities Investor Protection Corporation)
E.None of the above
F.Don't know/Not sure

If a company files for bankruptcy, which of the following securities is most at risk of becoming virtually worthless? A.The company's preferred stock
B.The company's common stock
C.The company's bonds
D.Don't know/Not sure

Which of the following best explains why many municipal bonds pay lower yields than other government bonds? A.Municipal bonds are lower risk
B.There is a greater demand for municipal bonds
C.Municipal bonds can be tax-free
D.Don't know/Not sure

You invest $500 to buy $1,000 worth of stock on margin. The value of the stock drops by 50%. You sell it. Approximately how much of your original $500 investment are you left with in the end? A.$500
B.$250
C.$0
D.Don't know/Not sure

Which is the best definition of "selling short"? A.Selling shares of a stock shortly after buying it
B.Selling shares of a stock before it has reached its peak
C.Selling shares of a stock at a loss
D.Selling borrowed shares of a stock
E.Don't know/Not sure

Hedge funds are always subject to the same rules and regulations as mutual funds. A.True
B.False
C.Don't know/Not sure

The principal difference between mutual fund share classes (Class A, Class B, Class C, etc.) is: A.The different investments each class makes
B.The different fees and expenses each class charges
C.The different investment advisers in charge of managing each class
D.Don't know/Not sure

A Section 529 Plan is a tax-advantaged way to save for: A.College
B.Retirement
C.Long-term health care
D.Don't know/Not sure