Question 1

Which of the following statements is true about common stocks as investments?

Accepted Answer

A)  Stocks are among the riskiest of all investments. 
B)  Stocks are most suitable for investors who seek security. 
C)  Stocks will never become worth less than their purchase price. 
D)  Stock prices reflect only government action. 
E)  Stock prices are easily manipulated. 
A)  Stocks are among the riskiest of all investments. 
B)  Stocks are most suitable for investors who seek security. 
C)  Stocks will never become worth less than their purchase price. 
D)  Stock prices reflect only government action. 
E)  Stock prices are easily manipulated.

Question 2

Which stock exchange has the highest volume of shares traded?

Accepted Answer

A)  American Stock Exchange 
B)  New York Stock Exchange 
C)  NASDAQ 
D)  Philadelphia Stock Exchange 
E)  SEC 
A)  American Stock Exchange 
B)  New York Stock Exchange 
C)  NASDAQ 
D)  Philadelphia Stock Exchange 
E)  SEC

Question 3

Aggressive growth funds are designed for investors who can accept the risk of loss inherent in common stock investing with severe price fluctuations,but also the potential for superior returns over time.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following assumptions does Ryerson have to make to support his statements?

Accepted Answer

A)  Some people make money by investing. 
B)  Interest is the only thing that changes the value of a savings account. 
C)  Most people want to save money instead of spending it. 
D)  Companies issue stock only if there is no other way to make money. 
E)  There are few companies whose stock always grows in value. 
A)  Some people make money by investing. 
B)  Interest is the only thing that changes the value of a savings account. 
C)  Most people want to save money instead of spending it. 
D)  Companies issue stock only if there is no other way to make money. 
E)  There are few companies whose stock always grows in value.

Question 5

Omar Ansari,a relatively conservative investor,received a prospectus from his stockbroker providing details about XYXY Biotech Company and its planned IPO.XYXY was developing a new and promising type of anti-cancer drug.After studying the prospectus,Omar decided not to invest in the IPO.Which one of the following items of information in the prospectus was most likely NOT a factor in Omar's decision?

Accepted Answer

A)  XYXY was competing with many other biotech companies. 
B)  XYXY's CEO, although not a famous scientist, had a solid background in cancer research. 
C)  XYXY's drug might not be approved by the FDA. 
D)  XYXY would not be profitable for many years, even if its new drug was approved by the FDA. 
E)  XYXY would soon have to return to the capital market for additional financing. 
A)  XYXY was competing with many other biotech companies. 
B)  XYXY's CEO, although not a famous scientist, had a solid background in cancer research. 
C)  XYXY's drug might not be approved by the FDA. 
D)  XYXY would not be profitable for many years, even if its new drug was approved by the FDA. 
E)  XYXY would soon have to return to the capital market for additional financing.

Question 6

Which of the following is a function performed by an investment bank?

Accepted Answer

A)  handling a client's portfolio in the secondary market 
B)  establishing relationships for a client with a commercial bank 
C)  underwriting purchases of stocks and bonds 
D)  arranging travel abroad for purchasers of foreign currencies 
E)  providing insurance services for clients 
A)  handling a client's portfolio in the secondary market 
B)  establishing relationships for a client with a commercial bank 
C)  underwriting purchases of stocks and bonds 
D)  arranging travel abroad for purchasers of foreign currencies 
E)  providing insurance services for clients

Question 7

Explain the Rule of 72.

Accepted Answer

The Rule of 72 is used to figure out how

Question 8

Which of the following,if true,might make the benefit more appealing to a prospective employee?

Accepted Answer

A)  In recent months, stocks have experienced a bull market. 
B)  The firm pays the maintenance fees for the investments. 
C)  Employees may choose the amount set aside each month, up to 10 percent of gross income, which is untaxed until the money is removed from the fund. 
D)  Over a ten-year period, the mutual funds included in the firm's option have accrued at a rate equal to the consumer price index. 
E)  The firm allows employees to select from and move funds around to a wide range of mutual fund options, some more conservative than others. 
A)  In recent months, stocks have experienced a bull market. 
B)  The firm pays the maintenance fees for the investments. 
C)  Employees may choose the amount set aside each month, up to 10 percent of gross income, which is untaxed until the money is removed from the fund. 
D)  Over a ten-year period, the mutual funds included in the firm's option have accrued at a rate equal to the consumer price index. 
E)  The firm allows employees to select from and move funds around to a wide range of mutual fund options, some more conservative than others.

Question 9

In case of financial distress,the firm would pay its stockholders before paying its bondholders.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is NOT true about dividend payments?

Accepted Answer

A)  Many companies distribute between 30 and 70 percent of their profits to shareholders. 
B)  Some firms, especially fast-growing companies, do not pay dividends. 
C)  Many fast-growing companies use cash earnings for expanding the company so that future earnings can grow even faster. 
D)  During unprofitable years, companies are still required by law to pay dividends to their stockholders. 
E)  Dividend payments are made to stockholders on a per-share basis. 
A)  Many companies distribute between 30 and 70 percent of their profits to shareholders. 
B)  Some firms, especially fast-growing companies, do not pay dividends. 
C)  Many fast-growing companies use cash earnings for expanding the company so that future earnings can grow even faster. 
D)  During unprofitable years, companies are still required by law to pay dividends to their stockholders. 
E)  Dividend payments are made to stockholders on a per-share basis.

Question 11

Lito is working with a discount broker.Which service would Lito NOT be likely to receive?

Accepted Answer

A)  stock research 
B)  industry analysis 
C)  face-to-face consultations 
D)  screening for specific types of stocks 
E)  quality suggestions for investments 
A)  stock research 
B)  industry analysis 
C)  face-to-face consultations 
D)  screening for specific types of stocks 
E)  quality suggestions for investments

Question 12

Which of the following allows after-hours trading and protects traders' anonymity?

Accepted Answer

A)  National Association of Securities Dealers Automated Quotation (NASDAQ) 
B)  New York Stock Exchange (NYS
E)  
C)  Electronic Communication Networks (ECNs) 
D)  Standard & Poor's 500 
E)  mutual funds 
A)  National Association of Securities Dealers Automated Quotation (NASDAQ) 
B)  New York Stock Exchange (NYS
E)  
C)  Electronic Communication Networks (ECNs) 
D)  Standard & Poor's 500 
E)  mutual funds

Question 13

An investment bank is a financial institution that specializes in issuing and reselling new securities.

Accepted Answer

A) True 
 B)False

Question 14

The time it takes to double an investment can be estimated by using which of the following?

Accepted Answer

A)  book value 
B)  the Rule of 72 
C)  blue-chips 
D)  dividends 
E)  market value 
A)  book value 
B)  the Rule of 72 
C)  blue-chips 
D)  dividends 
E)  market value

Question 15

Aardvark is considering undertaking an IPO in order to raise money.Which of the following,if true,would strengthen the case for doing so?

Accepted Answer

A)  The company's expected stock price will be low. 
B)  The company wants to maintain internal control over all its decision-making. 
C)  The company's customer base has been in decline. 
D)  The company has a healthy amount of assets. 
E)  The company is in a significant amount of debt. 
A)  The company's expected stock price will be low. 
B)  The company wants to maintain internal control over all its decision-making. 
C)  The company's customer base has been in decline. 
D)  The company has a healthy amount of assets. 
E)  The company is in a significant amount of debt.

Question 16

What is the formula for measuring a firm's working capital?

Accepted Answer

A)  current assets = working capital /current liabilities 
B)  working capital = current assets - current liabilities 
C)  current liabilities = current assets + working capital 
D)  working capital = current assets x current liabilities 
E)  current liabilities = current assets / working capital 
A)  current assets = working capital /current liabilities 
B)  working capital = current assets - current liabilities 
C)  current liabilities = current assets + working capital 
D)  working capital = current assets x current liabilities 
E)  current liabilities = current assets / working capital

Question 17

What is the term for a division of stock that gives stockholders a greater number of shares but does not change each individual's proportionate share of ownership?

Accepted Answer

A)  stock dividend 
B)  stock split 
C)  stock yield 
D)  stock warrant 
E)  stock exchange 
A)  stock dividend 
B)  stock split 
C)  stock yield 
D)  stock warrant 
E)  stock exchange

Question 18

If you purchased a share of GE stock for $33.82,then sold it one year later for $36.50,what would the price appreciation be?

Accepted Answer

A)  $1.68 
B)  $2.68 
C)  $33.82 
D)  $36.50 
E)  $67.24 
A)  $1.68 
B)  $2.68 
C)  $33.82 
D)  $36.50 
E)  $67.24

Question 19

Explain the principle of compound growth.

Accepted Answer

Compound growth is the compounding of in

Question 20

Jessica Jenkins,a 30-year-old history teacher,planned to invest $10,000 in an equity mutual fund.She wanted a fund with maximum geographical diversification.Jessica was seeking high capital gains from her investment and was comfortable with a fair amount of risk.Which one of the following types of mutual fund would Jessica most likely choose?

Accepted Answer

A)  large-cap technology fund 
B)  global large-cap value fund 
C)  global small-cap growth fund 
D)  Asian large-cap growth fund 
E)  foreign medium-cap growth fund 
A)  large-cap technology fund 
B)  global large-cap value fund 
C)  global small-cap growth fund 
D)  Asian large-cap growth fund 
E)  foreign medium-cap growth fund

Which of the following statements is true about common stocks as investments?

Which stock exchange has the highest volume of shares traded?

Aggressive growth funds are designed for investors who can accept the risk of loss inherent in common stock investing with severe price fluctuations,but also the potential for superior returns over time.

Which of the following assumptions does Ryerson have to make to support his statements?

Which of the following is a function performed by an investment bank?

Explain the Rule of 72.

Which of the following,if true,might make the benefit more appealing to a prospective employee?

In case of financial distress,the firm would pay its stockholders before paying its bondholders.

Which of the following statements is NOT true about dividend payments?

Lito is working with a discount broker.Which service would Lito NOT be likely to receive?

Which of the following allows after-hours trading and protects traders' anonymity?

An investment bank is a financial institution that specializes in issuing and reselling new securities.

The time it takes to double an investment can be estimated by using which of the following?

Aardvark is considering undertaking an IPO in order to raise money.Which of the following,if true,would strengthen the case for doing so?

What is the formula for measuring a firm's working capital?

What is the term for a division of stock that gives stockholders a greater number of shares but does not change each individual's proportionate share of ownership?

If you purchased a share of GE stock for $33.82,then sold it one year later for $36.50,what would the price appreciation be?

Explain the principle of compound growth.

The U.S.Business Environment

Understanding Business Ethics and Social Responsibility

Entrepreneurship, New Ventures, and Business Ownership

Understanding the Global Context of Business

Managing the Business

Organizing the Business

Operations Management and Quality for Producing Goods and Services

Employee Behavior and Motivation

Leadership and Decision Making

Human Resource Management and Labor Relations

Marketing Processes and Consumer Behavior

Developing and Pricing Products

Distributing and Promoting Products

Information Technology (IT)for Business

The Role of Accountants and Accounting Information

Understanding Money and the Role of Banking

Filters

Exam 17: Managing Business Finances

Which of the following statements is true about common stocks as investments?

Which stock exchange has the highest volume of shares traded?

Aggressive growth funds are designed for investors who can accept the risk of loss inherent in common stock investing with severe price fluctuations,but also the potential for superior returns over time.

Which of the following assumptions does Ryerson have to make to support his statements?

Which of the following is a function performed by an investment bank?

Explain the Rule of 72.

Which of the following,if true,might make the benefit more appealing to a prospective employee?

In case of financial distress,the firm would pay its stockholders before paying its bondholders.

Which of the following statements is NOT true about dividend payments?

Lito is working with a discount broker.Which service would Lito NOT be likely to receive?

Which of the following allows after-hours trading and protects traders' anonymity?

An investment bank is a financial institution that specializes in issuing and reselling new securities.

The time it takes to double an investment can be estimated by using which of the following?

Aardvark is considering undertaking an IPO in order to raise money.Which of the following,if true,would strengthen the case for doing so?

What is the formula for measuring a firm's working capital?

What is the term for a division of stock that gives stockholders a greater number of shares but does not change each individual's proportionate share of ownership?

If you purchased a share of GE stock for $33.82,then sold it one year later for $36.50,what would the price appreciation be?

Explain the principle of compound growth.

The U.S.Business Environment

Understanding Business Ethics and Social Responsibility

Entrepreneurship, New Ventures, and Business Ownership

Understanding the Global Context of Business

Managing the Business

Organizing the Business

Operations Management and Quality for Producing Goods and Services

Employee Behavior and Motivation

Leadership and Decision Making

Human Resource Management and Labor Relations

Marketing Processes and Consumer Behavior

Developing and Pricing Products

Distributing and Promoting Products

Information Technology (IT)for Business

The Role of Accountants and Accounting Information

Understanding Money and the Role of Banking

Filters