Question 1

The price-earnings ratio for a stock investment is calculated as:

Accepted Answer

A) price per share divided by the number of stockholders. 
B) the number of stockholders divided by the price per share. 
C) price per share divided by the number of shares outstanding. 
D) price per share divided by the earnings per share. 
E) the earnings per share divided by the price per share. 
A) price per share divided by the number of stockholders. 
B) the number of stockholders divided by the price per share. 
C) price per share divided by the number of shares outstanding. 
D) price per share divided by the earnings per share. 
E) the earnings per share divided by the price per share.

Question 2

Carol Fisher wants to sell the stock of Hathaway International at the next available price after the market price reaches $50 per share.What type of order should she place?

Accepted Answer

A) Market order 
B) Limit order 
C) Stop order 
D) Discretionary order 
E) Common order 
A) Market order 
B) Limit order 
C) Stop order 
D) Discretionary order 
E) Common order

Question 3

Which one of the following is a true statement regarding account executives?

Accepted Answer

A) They are generally not liable for client losses that result from their recommendations. 
B) It is wise to allow an account executive to make investment decisions without the client's approval. 
C) An account executive cannot buy and sell securities for clients and help them develop an investment program. 
D) An account executive is not licensed to buy or sell securities for clients. 
E) The arbitration clause allows clients to sue the brokerage firm that an account executive represents. 
A) They are generally not liable for client losses that result from their recommendations. 
B) It is wise to allow an account executive to make investment decisions without the client's approval. 
C) An account executive cannot buy and sell securities for clients and help them develop an investment program. 
D) An account executive is not licensed to buy or sell securities for clients. 
E) The arbitration clause allows clients to sue the brokerage firm that an account executive represents.

Question 4

Acme Widget,Inc.has 1,000 shareholders who own a total of two million shares of its common stock.The stock currently sells for $80 per share.The company earned $8 million after taxes.The annual dividend is $0.50 per share.The company has assets of $125 million and liabilities of $25 million.What is the P-E ratio?

Accepted Answer

A) 10 
B) 11 
C) 13 
D) 20 
E) 25 
A) 10 
B) 11 
C) 13 
D) 20 
E) 25

Question 5

A proxy is a legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individual or individuals.

Accepted Answer

A) True 
 B)False

Question 6

Which one of the following statements is true regarding buying stock on margin?

Accepted Answer

A) When buying stock on margin,an investor borrows stock from the brokerage firm. 
B) Usually,a bank arranges for the loan in a margin transaction. 
C) Investors buy on margin because doing so offers them the potential to buy more stock and therefore earn larger returns. 
D) The margin requirement is established by the New York Stock Exchange. 
E) The current margin requirement is 25 percent. 
A) When buying stock on margin,an investor borrows stock from the brokerage firm. 
B) Usually,a bank arranges for the loan in a margin transaction. 
C) Investors buy on margin because doing so offers them the potential to buy more stock and therefore earn larger returns. 
D) The margin requirement is established by the New York Stock Exchange. 
E) The current margin requirement is 25 percent.

Question 7

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

Accepted Answer

A) the same as 
B) lower than 
C) higher than 
D) unrelated to 
E) safer 
A) the same as 
B) lower than 
C) higher than 
D) unrelated to 
E) safer

Question 8

A market for existing financial securities that are currently traded among investors is called the ________ market.

Accepted Answer

A) technical 
B) fundamental 
C) efficient 
D) secondary 
E) primary 
A) technical 
B) fundamental 
C) efficient 
D) secondary 
E) primary

Question 9

Which one of the following is a true statement regarding stock advisory services?

Accepted Answer

A) When choosing a stock advisory service that charges fees for their information,the quality of the information is always excellent. 
B) Stock advisory services provide only printed materials to evaluate potential stock investments. 
C) There are less than a hundred stock advisory services that charge fees for their information. 
D) The information provided by investors' services consists of simple alphabetical listings only. 
E) For stocks,Value Line,Standard & Poor's,and Morningstar are three of the most popular advisory services. 
A) When choosing a stock advisory service that charges fees for their information,the quality of the information is always excellent. 
B) Stock advisory services provide only printed materials to evaluate potential stock investments. 
C) There are less than a hundred stock advisory services that charge fees for their information. 
D) The information provided by investors' services consists of simple alphabetical listings only. 
E) For stocks,Value Line,Standard & Poor's,and Morningstar are three of the most popular advisory services.

Question 10

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Accepted Answer

A) a direct investment plan. 
B) a dividend reinvestment plan. 
C) dollar cost averaging. 
D) buy-and-hold. 
E) day trading. 
A) a direct investment plan. 
B) a dividend reinvestment plan. 
C) dollar cost averaging. 
D) buy-and-hold. 
E) day trading.

Question 11

Last year,High-Tech Electronics earned $2.00 per share.If a share of its stock is selling for $60,what is the firm's P-E ratio?

Accepted Answer

A) 0.03 
B) 2 
C) 30 
D) 33 
E) 60 
A) 0.03 
B) 2 
C) 30 
D) 33 
E) 60

Question 12

Initial public offerings are a ________ investment.

Accepted Answer

A) guaranteed 
B) speculative 
C) safe 
D) conservative 
E) blue chip 
A) guaranteed 
B) speculative 
C) safe 
D) conservative 
E) blue chip

Question 13

Warren Buffett is well known for successfully employing which theory to identify both stocks and corporations that are undervalued?

Accepted Answer

A) Technical analysis 
B) Beta 
C) Efficient market hypothesis 
D) Fundamental analysis 
E) Stock market bubble 
A) Technical analysis 
B) Beta 
C) Efficient market hypothesis 
D) Fundamental analysis 
E) Stock market bubble

Question 14

Beverly Frickel purchased 100 shares of Gleason Systems stock for $32.50 per share.Her commission for this purchase was $25.She sold the stock two years later for $45 per share and a commission of $40.What was Beverly's total dollar return on this stock?

Accepted Answer

A) $1,100 
B) $1,185 
C) $1,500 
D) $3,275 
E) $4,460 
A) $1,100 
B) $1,185 
C) $1,500 
D) $3,275 
E) $4,460

Question 15

Which one of the following statements is true?

Accepted Answer

A) Board members are appointed by a company's management. 
B) Stockholders receive a tax break on dividend income. 
C) Investors should be concerned about the corporation's ability to earn profits and pay dividends in the future. 
D) If a cash dividend is declared by the board of directors,each stockholder will receive a different dollar amount per share. 
E) Corporate dividends are always paid in cash. 
A) Board members are appointed by a company's management. 
B) Stockholders receive a tax break on dividend income. 
C) Investors should be concerned about the corporation's ability to earn profits and pay dividends in the future. 
D) If a cash dividend is declared by the board of directors,each stockholder will receive a different dollar amount per share. 
E) Corporate dividends are always paid in cash.

Question 16

The stock of ABC Company has a dividend yield of 4%.The corporation has paid a dividend of $3.00 a share over the last 12 months and has earnings per share of $5.What is the current market price per share?

Accepted Answer

A) $13 
B) $25 
C) $75 
D) $93 
E) $225 
A) $13 
B) $25 
C) $75 
D) $93 
E) $225

Question 17

Matthew Boyd has saved $10,000 and wants to invest in common stock.Give examples of long-term techniques and short-term techniques that he could use to invest.Describe the difference between short-term and long-term investments.

Accepted Answer

Long-term techniques: 
(1)buy-and-hold t

Question 18

Kay Powers wants to diversify her portfolio by investing in a firm that has the potential to earn above average profits compared to other firms in the economy.What type of stock is Kay thinking about adding to her portfolio?

Accepted Answer

A) Defensive stock 
B) Cyclical stock 
C) Small cap stock 
D) Blue chip stock 
E) Growth stock 
A) Defensive stock 
B) Cyclical stock 
C) Small cap stock 
D) Blue chip stock 
E) Growth stock

Question 19

A limit order is a request to buy or sell a stock at a specified price or better.

Accepted Answer

A) True 
 B)False

Question 20

What is the primary difference between common stock and preferred stock?

Accepted Answer

The primary difference is that preferred

The price-earnings ratio for a stock investment is calculated as:

Carol Fisher wants to sell the stock of Hathaway International at the next available price after the market price reaches $50 per share.What type of order should she place?

Which one of the following is a true statement regarding account executives?

A proxy is a legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individual or individuals.

Which one of the following statements is true regarding buying stock on margin?

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

A market for existing financial securities that are currently traded among investors is called the ________ market.

Which one of the following is a true statement regarding stock advisory services?

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Last year,High-Tech Electronics earned $2.00 per share.If a share of its stock is selling for $60,what is the firm's P-E ratio?

Initial public offerings are a ________ investment.

Warren Buffett is well known for successfully employing which theory to identify both stocks and corporations that are undervalued?

Beverly Frickel purchased 100 shares of Gleason Systems stock for $32.50 per share.Her commission for this purchase was $25.She sold the stock two years later for $45 per share and a commission of $40.What was Beverly's total dollar return on this stock?

Which one of the following statements is true?

The stock of ABC Company has a dividend yield of 4%.The corporation has paid a dividend of $3.00 a share over the last 12 months and has earnings per share of $5.What is the current market price per share?

Matthew Boyd has saved $10,000 and wants to invest in common stock.Give examples of long-term techniques and short-term techniques that he could use to invest.Describe the difference between short-term and long-term investments.

Kay Powers wants to diversify her portfolio by investing in a firm that has the potential to earn above average profits compared to other firms in the economy.What type of stock is Kay thinking about adding to her portfolio?

A limit order is a request to buy or sell a stock at a specified price or better.

What is the primary difference between common stock and preferred stock?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: the Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health,disability,and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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Exam 14: Investing in Stocks

The price-earnings ratio for a stock investment is calculated as:

Carol Fisher wants to sell the stock of Hathaway International at the next available price after the market price reaches $50 per share.What type of order should she place?

Which one of the following is a true statement regarding account executives?

A proxy is a legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individual or individuals.

Which one of the following statements is true regarding buying stock on margin?

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

A market for existing financial securities that are currently traded among investors is called the ________ market.

Which one of the following is a true statement regarding stock advisory services?

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Last year,High-Tech Electronics earned $2.00 per share.If a share of its stock is selling for $60,what is the firm's P-E ratio?

Initial public offerings are a ________ investment.

Warren Buffett is well known for successfully employing which theory to identify both stocks and corporations that are undervalued?

Beverly Frickel purchased 100 shares of Gleason Systems stock for $32.50 per share.Her commission for this purchase was $25.She sold the stock two years later for $45 per share and a commission of $40.What was Beverly's total dollar return on this stock?

Which one of the following statements is true?

The stock of ABC Company has a dividend yield of 4%.The corporation has paid a dividend of $3.00 a share over the last 12 months and has earnings per share of $5.What is the current market price per share?

Matthew Boyd has saved $10,000 and wants to invest in common stock.Give examples of long-term techniques and short-term techniques that he could use to invest.Describe the difference between short-term and long-term investments.

Kay Powers wants to diversify her portfolio by investing in a firm that has the potential to earn above average profits compared to other firms in the economy.What type of stock is Kay thinking about adding to her portfolio?

A limit order is a request to buy or sell a stock at a specified price or better.

What is the primary difference between common stock and preferred stock?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: the Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health,disability,and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters