Question 1

________ are a company's distribution of its profits in the form of cash or stock to its owners.

Accepted Answer

A)  Dividends 
B)  Coupon interest payments 
C)  Equity payments 
D)  Shareholder divestments 
E)  none of the above 
A)  Dividends 
B)  Coupon interest payments 
C)  Equity payments 
D)  Shareholder divestments 
E)  none of the above

Question 2

The experts say that a person under the age of 40 should have a majority of their retirement money invested in the stock markets. What is the reason for this?

Accepted Answer

A)  On average, common stocks provide a higher return on investment than other investment options. 
B)  Younger people have enough time ahead of them to ride out any dramatic market movements. 
C)  Younger people generally don't have enough money to invest in other options. 
D)  All of the above are correct 
E)  Only A and B are correct 
A)  On average, common stocks provide a higher return on investment than other investment options. 
B)  Younger people have enough time ahead of them to ride out any dramatic market movements. 
C)  Younger people generally don't have enough money to invest in other options. 
D)  All of the above are correct 
E)  Only A and B are correct

Question 3

How do the three common investment strategies differ? Which is good if you want to avoid being killed rather than make a killing in the market?

Accepted Answer

Dollar cost averaging occurs when you bu

Question 4

The discounted dividends valuation model of common stock assumes that dividends will grow at a constant rate forever. This method tells us that the (dividend next year) divided by the (required rate of return ‑growth rate) yields the ________.

Accepted Answer

A)  discounted dividend 
B)  dividend growth rate 
C)  value of the common stock 
D)  value of the earnings 
E)  value of the P/E ratio 
A)  discounted dividend 
B)  dividend growth rate 
C)  value of the common stock 
D)  value of the earnings 
E)  value of the P/E ratio

Question 5

What are the three factors that explain why stock values fluctuate?

Accepted Answer

As interest rates rise, the value of the

Question 6

If your stock's beta was greater than 1.0 that indicates that your stock is more susceptible to movements in the market.

Accepted Answer

A) True 
 B)False

Question 7

A ________ is a measure of the performance of a group of stocks that represent the market or a sector of the market.

Accepted Answer

A)  stock market index 
B)  stock grouping 
C)  market composite 
D)  portfolio return 
E)  none of the above 
A)  stock market index 
B)  stock grouping 
C)  market composite 
D)  portfolio return 
E)  none of the above

Question 8

The DJIA weights stocks based on ________.

Accepted Answer

A)  the size of the company 
B)  their place alphabetically 
C)  their relative prices 
D)  none of the above 
A)  the size of the company 
B)  their place alphabetically 
C)  their relative prices 
D)  none of the above

Question 9

Returns from shares of stock come in the form of

Accepted Answer

A)  stock splits. 
B)  capital appreciation. 
C)  dividends. 
D)  All of the above are correct. 
E)  Only B and C are correct 
A)  stock splits. 
B)  capital appreciation. 
C)  dividends. 
D)  All of the above are correct. 
E)  Only B and C are correct

Question 10

A company's dividend distribution can be in the form of cash or additional stock.

Accepted Answer

A) True 
 B)False

Question 11

If you are very optimistic about the ability of firms to earn profits today and in the immediate future, what type of investor philosophy do you exhibit?

Accepted Answer

A)  animalistic 
B)  bullish 
C)  bearish 
D)  psychic 
A)  animalistic 
B)  bullish 
C)  bearish 
D)  psychic

Question 12

A stock split is a tactic by a corporation to manipulate the market price of its stock.

Accepted Answer

A) True 
 B)False

Question 13

Capital appreciation refers to an increase in the selling price of your shares of stock.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is most correct regarding the general relationship between stocks and interest rates?

Accepted Answer

A)  There is no relationship between interest rates and stock prices. 
B)  As interest rates increase, stock prices should also increase. 
C)  As interest rates increase, stock prices should decrease. 
D)  Stock prices are negatively exponentially related to interest rate increases. 
E)  none of the above 
A)  There is no relationship between interest rates and stock prices. 
B)  As interest rates increase, stock prices should also increase. 
C)  As interest rates increase, stock prices should decrease. 
D)  Stock prices are negatively exponentially related to interest rate increases. 
E)  none of the above

Question 15

This equation, dividends next year/required rate of return minus growth rate tells us the stock's ________.

Accepted Answer

A)  dividend yield 
B)  earnings per share 
C)  value 
D)  growth potential 
E)  book-to-price ratio 
A)  dividend yield 
B)  earnings per share 
C)  value 
D)  growth potential 
E)  book-to-price ratio

Question 16

Speculative stocks are often traded through the OTC Bulletin Board.

Accepted Answer

A) True 
 B)False

Question 17

Nathan noticed that a company that has great potential just declared a ________ because its stock price was getting too high for the small investor to buy the stock. The company will substitute more shares for the existing shares of stock without increasing the market value of the firm.

Accepted Answer

A)  dividend yield 
B)  stock repurchase 
C)  claim on income 
D)  stock split 
E)  stock splice 
A)  dividend yield 
B)  stock repurchase 
C)  claim on income 
D)  stock split 
E)  stock splice

Question 18

Why is using the P/E ratio a very popular valuation tool?

Accepted Answer

Many investors use the P/E ratio because

Question 19

If you were to purchase common stocks issued by large, nationally known companies with sound financial histories with solid dividend and growth records you would own what are called ________.

Accepted Answer

A)  best-bet stocks 
B)  blue-chip stocks 
C)  performance stocks 
D)  long-run performance stocks 
E)  none of the above 
A)  best-bet stocks 
B)  blue-chip stocks 
C)  performance stocks 
D)  long-run performance stocks 
E)  none of the above

Question 20

ComChip is a computer chip manufacturer. Its stock is selling at $50 per share and earnings are $2 per share. What is the stock's P/E ratio?

Accepted Answer

A)  50.00 
B)  45.80 
C)  25.00 
D)  27.78 
E)  22.50 
A)  50.00 
B)  45.80 
C)  25.00 
D)  27.78 
E)  22.50

________ are a company's distribution of its profits in the form of cash or stock to its owners.

The experts say that a person under the age of 40 should have a majority of their retirement money invested in the stock markets. What is the reason for this?

How do the three common investment strategies differ? Which is good if you want to avoid being killed rather than make a killing in the market?

The discounted dividends valuation model of common stock assumes that dividends will grow at a constant rate forever. This method tells us that the (dividend next year) divided by the (required rate of return ‑growth rate) yields the ________.

What are the three factors that explain why stock values fluctuate?

If your stock's beta was greater than 1.0 that indicates that your stock is more susceptible to movements in the market.

A ________ is a measure of the performance of a group of stocks that represent the market or a sector of the market.

The DJIA weights stocks based on ________.

Returns from shares of stock come in the form of

A company's dividend distribution can be in the form of cash or additional stock.

If you are very optimistic about the ability of firms to earn profits today and in the immediate future, what type of investor philosophy do you exhibit?

A stock split is a tactic by a corporation to manipulate the market price of its stock.

Capital appreciation refers to an increase in the selling price of your shares of stock.

Which of the following statements is most correct regarding the general relationship between stocks and interest rates?

This equation, dividends next year/required rate of return minus growth rate tells us the stock's ________.

Speculative stocks are often traded through the OTC Bulletin Board.

Nathan noticed that a company that has great potential just declared a ________ because its stock price was getting too high for the small investor to buy the stock. The company will substitute more shares for the existing shares of stock without increasing the market value of the firm.

Why is using the P/E ratio a very popular valuation tool?

If you were to purchase common stocks issued by large, nationally known companies with sound financial histories with solid dividend and growth records you would own what are called ________.

ComChip is a computer chip manufacturer. Its stock is selling at $50 per share and earnings are $2 per share. What is the stock's P/E ratio?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 13: Investing in Stocks

________ are a company's distribution of its profits in the form of cash or stock to its owners.

The experts say that a person under the age of 40 should have a majority of their retirement money invested in the stock markets. What is the reason for this?

How do the three common investment strategies differ? Which is good if you want to avoid being killed rather than make a killing in the market?

The discounted dividends valuation model of common stock assumes that dividends will grow at a constant rate forever. This method tells us that the (dividend next year) divided by the (required rate of return ‑growth rate) yields the ________.

What are the three factors that explain why stock values fluctuate?

If your stock's beta was greater than 1.0 that indicates that your stock is more susceptible to movements in the market.

A ________ is a measure of the performance of a group of stocks that represent the market or a sector of the market.

The DJIA weights stocks based on ________.

Returns from shares of stock come in the form of

A company's dividend distribution can be in the form of cash or additional stock.

If you are very optimistic about the ability of firms to earn profits today and in the immediate future, what type of investor philosophy do you exhibit?

A stock split is a tactic by a corporation to manipulate the market price of its stock.

Capital appreciation refers to an increase in the selling price of your shares of stock.

Which of the following statements is most correct regarding the general relationship between stocks and interest rates?

This equation, dividends next year/required rate of return minus growth rate tells us the stock's ________.

Speculative stocks are often traded through the OTC Bulletin Board.

Nathan noticed that a company that has great potential just declared a ________ because its stock price was getting too high for the small investor to buy the stock. The company will substitute more shares for the existing shares of stock without increasing the market value of the firm.

Why is using the P/E ratio a very popular valuation tool?

If you were to purchase common stocks issued by large, nationally known companies with sound financial histories with solid dividend and growth records you would own what are called ________.

ComChip is a computer chip manufacturer. Its stock is selling at $50 per share and earnings are $2 per share. What is the stock's P/E ratio?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters