1. Which of the following statements is true?
1. The investment portfolio of younger investors should be heavily weighted toward conservative assets such as government bonds and blue chip stocks.
2. Bond prices and interest rates fluctuate directly.
3. The relationship between risk and potential reward is inverse.
4. During an economic contraction, bond prices are likely to rise.
2. Which of the following statements is false?
The price-earnings ratio of a particular stock is not indicative of its future
A well diversified investment portfolio should include some risky assets.
Preferred stock is less risky than common stock.
Preferred stocks pay a higher potential reward than common stocks.
3. The benefit of maxing out your tax-sheltered retirement plans such as an IRA or 401(k) is:
the tax benefits permit you to start out with a larger principal.
the tax benefits permit your principal to grow at a faster rate.
your effective rate of return could be increased because employers sometimes makes a contribution.
all of the above