Exam 12: Investing in Stocks and Bonds

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Zero coupon bonds will pay interest [at maturity | annually].

Earnings per share (EPS)tell the stockholder the amount of dividend earned.

Which of the following bond ratings would be for junk bonds?

Blue-chip stocks are expected to pay dividends more regularly than growth stocks.

Bonds represent a form of corporate debt capital.

One of the more appealing features of a common stock is that stock investments

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -You are looking for a relatively steady stream of income with some potential for growth;you should invest in [income stocks | growth stocks].

If Wristwatch Arm Corporation (WAC)has assets of $10 million,liabilities of $5 million,and preferred stock of $1 million,its book value is $6 million.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The stock market as a whole has a beta of [+1.0 | -1.0].

A characteristic of defensive stocks is

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -By holding stock in 5 companies,you are reducing [market | business] risk.

TIPS are appropriate investors who are conservative and concerned about inflation.

Stocks with high betas will have larger price gains and losses than those with low betas.

Which of the following is most likely to occur immediately following the announcement that the rating on a corporate bond has been lowered to junk status?

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Stock dividends are usually paid [monthly | annually | semi-annually].

A lower expected return will mean a higher risk will have to be accepted.

Bond prices and current interest rates are ____ related.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -More conservative investors would prefer stocks with [higher | lower] betas.

Publicly traded issues are shares only available to qualified investors.

Bonds can be used conservatively by investors seeking current income and aggressively by investors seeking capital gains.