Buying on margin::Precludes the advantage of using leverage.Is not affected by limits on borrowing established by ERISA.Minimizes losses if the price of a security declines.Is possible by borrowing from a broker.
A stock certificate:Is always issued to the individual investor.Represents a primary claim on the firm’s assets.Represents ownership in a corporation.Is handwritten.
Dividends are taxed:At the investor’s marginal income tax rate.At a maximum rate of 15%.Only when the stock is sold.Dividends are never taxed.
For most Americans, taxes are due on:January 1.April 1.April 15.December 31.
Investments in CDs:Are riskier than investments in stocks.Are inferior to investments in 8-tracks and vinyl records.Are always tax deferred.Are insured by the FDIC, but have generally underperformed stock investments over the long run.
Junk bonds:Are bonds issued by junk yards.Are sometimes called "high yield bonds."Are less risky than government bonds.Are not actually bonds.
A limit order:Is used to protect a profit if it is a limit order to buy.Is used to execute a sell at a specific price or lower if possible.Is an order to buy or sell at a specific price or better and can be good till canceled.Is an order to be executed at the best price available and is not known until after confirmation is received.
A zero coupon bond:Is sold at a discount to face value.Is worthless.Matures immediately.Always has a call feature.
