1. Which of the following statements is false?

the stock and bond markets are very efficient.

In real life, when an individual expects the economy to expand, he should hold no nominal assets.

corporations, unlike proprietorships and partnerships, are subject to double taxation.

bond prices will fall when lenders expect higher rates inflation in the future.

2. Which of the following statements is true?

The investment portfolio of younger investors should be heavily weighted toward conservative assets such as government bonds and blue chip stocks.

Bond prices and interest rates fluctuate directly.

The relationship between risk and potential reward is inverse.

During an economic contraction, bond prices are likely to rise.

3. Which of the following statements is true?

A risk averse investor would prefer low cap stocks to large cap stocks.

A growth stock would pay low (or no) dividends.

Low cap stocks provide the lowest potential rate of return.

Blue chip stocks provide a greater growth potential than growth stocks.