Investment Test 3

Question 1

What does the P/E ratio measure?

Accepted Answer

Price relative to earnings per share

Answer

The P/E ratio compares a stock's price to its earnings per share.

Question 2

Which investment is generally considered the safest in the US?

Accepted Answer

US Treasury securities

Answer

US Treasury securities are backed by the federal government and considered safest.

Question 3

What is dollar-cost averaging?

Accepted Answer

Investing a fixed amount at regular intervals

Answer

Dollar-cost averaging invests a fixed amount at regular intervals regardless of price.

Question 4

A stock has a beta of 1.5. If the market rises 10%, what is the expected move?

Accepted Answer

Up 15%

Answer

Beta of 1.5 means the stock is expected to move 1.5x the market, or 15%.

Question 5

What is an ETF?

Accepted Answer

An exchange-traded fund

Answer

ETF stands for exchange-traded fund, traded like a stock on an exchange.

Investment Practice Test