Question 1

_____ is a term used to describe a situation when stocks are trading at prices above their actual worth.

Accepted Answer

A)  inflated corporate earnings.
B)  a low unemployment rate.
C)  changes in government regulation.
D)  stock market bubble.
E)  economic turmoil.F) B) and C)
G) B) and D)

Question 2

The dividend yield for a stock investment is calculated by dividing:

Accepted Answer

A)  the annual dividend amount per share by the investment's past price per share.
B)  the annual dividend amount per share by the investment's current price per share.
C)  the annual dividend amount per share by the investment's future price per share.
D)  the investment's past price per share by the annual dividend amount per share.
E)  the investment's current price per share by the annual dividend amount per share.F) B) and D)
G) B) and E)

Question 3

Assume the beta for the stock market in general is 1.0 and the beta for World-Wide Television Productions is 2.4.If the stock market increases in value by 10 percent,what is the expected increase in value for the World-Wide Productions stock?

Accepted Answer

A)  12 percent
B)  20 percent
C)  24 percent
D)  48 percent
E)  14 percentF) A) and D)
G) A) and C)

Question 4

The stock exchange known to trade stock for innovative,forward-looking growth companies is the:

Accepted Answer

A)  NYSE.
B)  NASDAQ.
C)  American Stock exchange.
D)  S & P 100.
E)  STSE.F) B) and D)
G) B) and E)

Question 5

ABC Corporation has assets that total $12 million and liabilities that total $4 million.It also has 500,000 shares of stock outstanding.What is the ABC's book value per share?

Accepted Answer

A)  $32
B)  $24
C)  $16
D)  $8
E)  $0F) C) and D)
G) A) and B)

Question 6

Which one of the following is a true statement?

Accepted Answer

A)  When choosing a stock advisory service that charges fees for their investment advice, the quality of the information is always excellent.
B)  Morningstar's Investors Service only provides information about bonds.
C)  Value Line provides information about bonds and mutual funds, but not common stocks.
D)  The information provided by investors' services consists of simple alphabetical listings only.
E)  Online computer services may be used to research companies and to obtain current stock prices.F) C) and E)
G) B) and D)

Question 7

Since the end of World War II,stocks have returned on average close to 10 percent a year.

Accepted Answer

A) True 
 B)False

Question 8

If a stock has a 2-for-1 split:

Accepted Answer

A)  the value of the stock is guaranteed to increase.
B)  the value of the stock is guaranteed to decrease.
C)  total market capitalization increases.
D)  total market capitalization decreases.
E)  total market capitalization does not change.F) A) and E)
G) C) and D)

Question 9

Dividends remain with the stock until:

Accepted Answer

A)  two business days before the date of record.
B)  two business days after the date of record.
C)  three days before the date of record.
D)  three days after the date of record.
E)  three days before the actual payment date.F) D) and E)
G) A) and C)

Question 10

George Clancy wants to diversify his portfolio by adding a stock that has a value which moves in direct relation to the business cycle.What type of stock is George thinking about adding to his portfolio?

Accepted Answer

A)  Defensive stock
B)  Cyclical stock
C)  Small-cap stock
D)  Blue chip stock
E)  Growth stockF) B) and E)
G) A) and B)

Question 11

Which order is executed if and when the specified price or better is reached and all other previously received orders have been fulfilled?

Accepted Answer

A)  market
B)  limit
C)  stop
D)  round
E)  discretionaryF) A) and B)
G) A) and C)

Question 12

To finance their business activities,many corporations prefer selling common stock because:

Accepted Answer

A)  it does not have to be repaid until 10 to 15 years after it has been issued.
B)  interest payments to stockholders are lower than interest paid to a bank.
C)  common shareholders have no voting rights.
D)  interest paid to stockholders is tax deductible.
E)  the money obtained from stockholders does not have to be repaid.F) All of the above
G) B) and D)

Question 13

A call option gives the purchaser the right to sell 100 shares of a stock at a guaranteed price before a definite expiration date.

Accepted Answer

A) True 
 B)False

Question 14

Lindsey Holt owns stock in the Galloway Gems Company.She knows in advance that the dividend on this stock is a $1.50 per share..Given this,you know for sure that she purchased which type of stock?

Accepted Answer

A)  Preferred
B)  Common
C)  Blue chip
D)  Growth
E)  PennyF) A) and C)
G) A) and E)

Question 15

Mellon Manufacturing has after-tax income of $3 million.It also has 2 million shares of stock outstanding.What is the corporation's earnings per share?

Accepted Answer

A)  $3.00
B)  $2.00
C)  $1.50
D)  $0.67
E)  $0.75F) All of the above
G) A) and B)

Question 16

When investors purchase stock on margin,they borrow stock from a stockbroker or brokerage firm.

Accepted Answer

A) True 
 B)False

Question 17

A very safe investment that generally attracts conservative investors is called a ____________ stock.

Accepted Answer

A)  penny
B)  cyclical
C)  growth
D)  small cap
E)  blue chipF) B) and E)
G) A) and B)

Question 18

An order to sell a particular stock at the next available opportunity after the market price of the stock reaches a specified price is called a ____________ order.

Accepted Answer

A)  market
B)  limit
C)  stop
D)  round
E)  discretionaryF) C) and E)
G) B) and D)

Question 19

Becky Martinez paid $65 a share for stock in GBX Corporation.The stock has a current market value of $48 a share and pays $1.60 a year in dividends per share.What is the dividend yield rounded to the nearest tenth of a percent?

Accepted Answer

A)  2.5 percent
B)  7.4 percent
C)  3.3 percent
D)  30.0 percent
E)  40.0 percent.F) B) and D)
G) A) and D)

Question 20

To calculate dividend yield,the annual dividend amount per share is divided by the _______ per share.

Accepted Answer

A)  current stock price
B)  stock's original issue value
C)  current earnings
D)  current book value
E)  current sales revenueF) C) and E)
G) A) and C)

Exam 14: Investing in Stock

Assume the beta for the stock market in general is 1.0 and the beta for World-Wide Television Productions is 2.4.If the stock market increases in value by 10 percent,what is the expected increase in value for the World-Wide Productions stock?

Correct AnswerverifiedShow Answer

The dividend yield for a stock investment is calculated by dividing:

Correct AnswerverifiedShow Answer

Mellon Manufacturing has after-tax income of $3 million.It also has 2 million shares of stock outstanding.What is the corporation's earnings per share?

Correct AnswerverifiedShow Answer

The stock exchange known to trade stock for innovative,forward-looking growth companies is the:

Correct AnswerverifiedShow Answer

George Clancy wants to diversify his portfolio by adding a stock that has a value which moves in direct relation to the business cycle.What type of stock is George thinking about adding to his portfolio?

Correct AnswerverifiedShow Answer

An order to sell a particular stock at the next available opportunity after the market price of the stock reaches a specified price is called a ____________ order.

Correct AnswerverifiedShow Answer

If a stock has a 2-for-1 split:

Correct AnswerverifiedShow Answer

When investors purchase stock on margin,they borrow stock from a stockbroker or brokerage firm.

Correct AnswerverifiedShow Answer

A very safe investment that generally attracts conservative investors is called a ____________ stock.

Correct AnswerverifiedShow Answer

_____ is a term used to describe a situation when stocks are trading at prices above their actual worth.

Correct AnswerverifiedShow Answer

Dividends remain with the stock until:

Correct AnswerverifiedShow Answer

Lindsey Holt owns stock in the Galloway Gems Company.She knows in advance that the dividend on this stock is a $1.50 per share..Given this,you know for sure that she purchased which type of stock?

Correct AnswerverifiedShow Answer

To finance their business activities,many corporations prefer selling common stock because:

Correct AnswerverifiedShow Answer

ABC Corporation has assets that total $12 million and liabilities that total $4 million.It also has 500,000 shares of stock outstanding.What is the ABC's book value per share?

Correct AnswerverifiedShow Answer

A call option gives the purchaser the right to sell 100 shares of a stock at a guaranteed price before a definite expiration date.

Correct AnswerverifiedShow Answer

To calculate dividend yield,the annual dividend amount per share is divided by the _______ per share.

Correct AnswerverifiedShow Answer

Which one of the following is a true statement?

Correct AnswerverifiedShow Answer

Becky Martinez paid $65 a share for stock in GBX Corporation.The stock has a current market value of $48 a share and pays $1.60 a year in dividends per share.What is the dividend yield rounded to the nearest tenth of a percent?

Correct AnswerverifiedShow Answer

Which order is executed if and when the specified price or better is reached and all other previously received orders have been fulfilled?

Correct AnswerverifiedShow Answer

Since the end of World War II,stocks have returned on average close to 10 percent a year.

Correct AnswerverifiedShow Answer

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