Review questions

| February 1, 2016

Review questions
Chapter 10: 2, 7, 19, 21
Chapter 11: 1, 3, 12, 14.
Chapter 13: 2, 9, 11, 12, 19.

Chp 10
2.List and describe the four parts of Section I and the two parts of Section II of a homeowner’s insurance policy.
7.Develop a list of guidelines that homeowners should consider when purchasing a homeowner’s policy.
19. Describe the factors that are major determinants of the cost of auto insurance.
21. List and briefly describe the ways a consumer can reduce the cost of auto insurance premiums.

CHP 11
Explain the difference between investing and speculating. Give an example of each.
What are five ways to find money to invest?
Why might investors not be willing to take risks with their investment portfolios even though they take risks elsewhere? What investment concepts might help them be more willing to take an appropriate amount of risk?
What is meant by the term “asset allocation”? What makes asset allocation such a simple and powerful concept? When should an investor change an asset allocation mix?
Chp 13
List and describe four reasons why someone should consider investing in stocks.
Two of the most commonly cited stock market indexes are the Dow and the S&P 500. Which of these two indexes better represents movements in the overall market? Why?
11.Describe the following stock classifications: (a) blue-chip stock, (b) growth stock, (c) income stock, (d) speculative stock, (e) cyclical stock, and (f) defensive stock. Identify one publicly traded company as an example of each.
How are large-cap, mid-cap, and small-cap companies defined? Which of these types tend to produce the highest average return?
Explain two ways an investor can reduce risk when purchasing stocks.

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