Exam 13: Investing in Stocks

Which one of the popular common stock valuation methods focuses on supply and demand and uses a computer and charts to identify and project price trends for a stock or for the market as a whole?

The dividend yield is calculated by dividing the earnings per share by the market price of the stock.

Compared to other investment options, we can safely say that investing in stocks

Your dad said that he was curious to know why there is so much fluctuation in the value of common stocks. In 1997 the prospects for Sun Industries became more uncertain and investors began to view it as a more risky investment than they had previously. To compensate for this added risk, investors increased their required rate of return on Sun Industries stock, resulting in a decline in its market value. This explains the factor of ________.

The net income of the firm is $4 million dollars. The firm will pay $500,000 in dividends to the preferred shareholders. There are currently 1 million shares of common stock outstanding. What are the earnings per share for this firm?

You are looking at the stock quotes in your newspaper and you see that your stock closed up 5% yesterday. Where would you look to see how it has been doing over the last year?

When you got home after work, you saw on the news that the S&P was down by 20 points. Which of the following is true?

In the short run, market variability or volatility creates potential risk.

Discuss the concept of using BETA for investing in stocks.

Using the stock valuation formula calculate the value of a share of stock if it is expected to pay $5 in dividends, in addition the dividends are expected to grow at a rate of 4 percent forever, and the investor's required rate of return is 12 percent.

If you wanted information about how the entire stock market is performing, which index would provide you with information on virtually all types and sizes of companies?

A buy-and-hold investment strategy

You are considering purchasing one of two stocks. Stock A is expected to pay a $2.50 dividend, and has historically grown at 6%. Stock B is expected to pay a $3.00 dividend and has historically grown at 4%. Both are the same risk, and you desire to earn a 16% return. Which of the following is true?

The S&P 500

The ________ is a common stock indicator, consisting of 30 large industrial firms, and is used to indicate how well stocks have done.

Technical analysis focuses on supply and demand, using charts and computer programs to project stock trends.

The Dow Jones Industrial Average has been an index since what year?

By using the risk evaluation tool called beta, you can measure the movement of your individual stock compared to the S & P 500.

The Dow Jones Industrial Average is based on the movement of 500 stocks, primarily from the NYSE.

Common stockholders are entitled to elect the company's board of directors. Usually one share of stock is equal to ________ vote(s).