Question 1

The discounted dividends valuation model states that the value of a share of stock is the present value of its future dividends.

Accepted Answer

A) True 
 B)False

Question 2

Both capital gains and dividends are guaranteed with common stock.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following makes common stocks more risky than corporate bonds when both are issued by the same company?

Accepted Answer

A)  Claims on income 
B)  Unlimited liability 
C)  Claims on assets 
D)  All of the above are correct. 
E)  Only A and C are correct 
A)  Claims on income 
B)  Unlimited liability 
C)  Claims on assets 
D)  All of the above are correct. 
E)  Only A and C are correct

Question 4

You and a group of your friends have been discussing your portfolios at the company water cooler. Your discussion has centered on how your stocks are moving up or down in price relative to the market as a whole. Each stock's ________ is likely the best measure of the relationship.

Accepted Answer

A)  relative index 
B)  beta 
C)  alpha 
D)  delta 
E)  none of the above 
A)  relative index 
B)  beta 
C)  alpha 
D)  delta 
E)  none of the above

Question 5

Proctor and Gamble is an example of a blue-chip stock.

Accepted Answer

A) True 
 B)False

Question 6

When a corporation engages in a stock repurchase, each remaining shareholder owns a smaller proportion of the firm.

Accepted Answer

A) True 
 B)False

Question 7

Greg Jewell read about several companies that were performing relatively well despite the current recession. Stocks like these, that in some cases actually perform better during downturns in the economy, are called ________ stocks.

Accepted Answer

A)  cyclical 
B)  speculative 
C)  defensive 
D)  growth 
E)  seasonal 
A)  cyclical 
B)  speculative 
C)  defensive 
D)  growth 
E)  seasonal

Question 8

Your investment goal is to receive a stream of income from your investment. Which of the following would be important information to determine whether a particular stock purchase would suit your plan?

Accepted Answer

A)  the earnings per share 
B)  the market-to-book ratio. 
C)  the book value. 
D)  the dividend yield 
A)  the earnings per share 
B)  the market-to-book ratio. 
C)  the book value. 
D)  the dividend yield

Question 9

A(n) ________ is a legal agreement signed by a stockholder allowing someone else to vote on his or her behalf at the corporation's annual meeting.

Accepted Answer

A)  voting contract 
B)  agency contact 
C)  contingency contract 
D)  proxy 
E)  none of the above 
A)  voting contract 
B)  agency contact 
C)  contingency contract 
D)  proxy 
E)  none of the above

Question 10

What factors can effect the market price of a stock?

Accepted Answer

There are many factors that can effect t

Question 11

If your portfolio is very diversified then the beta is of no use to you.

Accepted Answer

A) True 
 B)False

Question 12

Every company must pay dividends as a portion of the company's profits to its stockholders.

Accepted Answer

A) True 
 B)False

Question 13

What are proxy fights?

Accepted Answer

A)  Proxy fights are when two rival companies want the same voters. 
B)  Proxy fights are battles for proxy votes between rival groups of share holders in separate companies. 
C)  Proxy fights are battles for proxy votes between rival groups of share holders in the same company. 
D)  Proxy fights are when shareholders fight over who will cast their votes. 
E)  There is no such thing as a proxy fight. 
A)  Proxy fights are when two rival companies want the same voters. 
B)  Proxy fights are battles for proxy votes between rival groups of share holders in separate companies. 
C)  Proxy fights are battles for proxy votes between rival groups of share holders in the same company. 
D)  Proxy fights are when shareholders fight over who will cast their votes. 
E)  There is no such thing as a proxy fight.

Question 14

Jessica wanted to gauge stock performance in general. She found a useful tool that measured the stock prices of 30 large industrial firms, called the ________.

Accepted Answer

A)  Dow Jones Industrial Average 
B)  Standard & Poor's Index 
C)  Value Line Survey 
D)  Moody's Index 
E)  none of the above 
A)  Dow Jones Industrial Average 
B)  Standard & Poor's Index 
C)  Value Line Survey 
D)  Moody's Index 
E)  none of the above

Question 15

Dividends

Accepted Answer

A)  are always paid, regardless of the company's profitability. 
B)  are always paid when the company makes a profit. 
C)  are never paid to common stockholders; only preferred stockholders receive them. 
D)  None of the above is true. 
A)  are always paid, regardless of the company's profitability. 
B)  are always paid when the company makes a profit. 
C)  are never paid to common stockholders; only preferred stockholders receive them. 
D)  None of the above is true.

Question 16

The letters or characters that represent a stock is known as the stock's ________.

Accepted Answer

A)  ticker 
B)  code 
C)  acronym 
D)  share 
A)  ticker 
B)  code 
C)  acronym 
D)  share

Question 17

Most of the stocks listed in the Dow Jones Industrials have high P/E ratios and are classified as speculative stocks.

Accepted Answer

A) True 
 B)False

Question 18

The dividend yield on a share of common stock is ________.

Accepted Answer

A)  available at most large companies. 
B)  the amount of annual dividends divided by the market price of the stock. 
C)  the taxes you pay on the reinvested dividends. 
D)  All of the above 
E)  Only A and B 
A)  available at most large companies. 
B)  the amount of annual dividends divided by the market price of the stock. 
C)  the taxes you pay on the reinvested dividends. 
D)  All of the above 
E)  Only A and B

Question 19

The following equation, (net income ‑preferred stock dividends)/number of shares of common stock outstanding, allows us to calculate the ________ and this information is necessary to calculate the ________ ratio.

Accepted Answer

A)  dividend yield; dividend 
B)  earnings per share; P/E 
C)  market-to-book ratio; book-to-market 
D)  stock growth: P/E 
E)  price-to-book ratio; market-to-book 
A)  dividend yield; dividend 
B)  earnings per share; P/E 
C)  market-to-book ratio; book-to-market 
D)  stock growth: P/E 
E)  price-to-book ratio; market-to-book

Question 20

Discuss the relationship between growth stocks and income stocks and their P/E ratios.

Accepted Answer

A growth stock is a company that is acti

The discounted dividends valuation model states that the value of a share of stock is the present value of its future dividends.

Both capital gains and dividends are guaranteed with common stock.

Which of the following makes common stocks more risky than corporate bonds when both are issued by the same company?

You and a group of your friends have been discussing your portfolios at the company water cooler. Your discussion has centered on how your stocks are moving up or down in price relative to the market as a whole. Each stock's ________ is likely the best measure of the relationship.

Proctor and Gamble is an example of a blue-chip stock.

When a corporation engages in a stock repurchase, each remaining shareholder owns a smaller proportion of the firm.

Greg Jewell read about several companies that were performing relatively well despite the current recession. Stocks like these, that in some cases actually perform better during downturns in the economy, are called ________ stocks.

Your investment goal is to receive a stream of income from your investment. Which of the following would be important information to determine whether a particular stock purchase would suit your plan?

A(n) ________ is a legal agreement signed by a stockholder allowing someone else to vote on his or her behalf at the corporation's annual meeting.

What factors can effect the market price of a stock?

If your portfolio is very diversified then the beta is of no use to you.

Every company must pay dividends as a portion of the company's profits to its stockholders.

What are proxy fights?

Jessica wanted to gauge stock performance in general. She found a useful tool that measured the stock prices of 30 large industrial firms, called the ________.

Dividends

The letters or characters that represent a stock is known as the stock's ________.

Most of the stocks listed in the Dow Jones Industrials have high P/E ratios and are classified as speculative stocks.

The dividend yield on a share of common stock is ________.

The following equation, (net income ‑preferred stock dividends)/number of shares of common stock outstanding, allows us to calculate the and this information is necessary to calculate the ratio.

Discuss the relationship between growth stocks and income stocks and their P/E ratios.

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

The discounted dividends valuation model states that the value of a share of stock is the present value of its future dividends.

Both capital gains and dividends are guaranteed with common stock.

Which of the following makes common stocks more risky than corporate bonds when both are issued by the same company?

You and a group of your friends have been discussing your portfolios at the company water cooler. Your discussion has centered on how your stocks are moving up or down in price relative to the market as a whole. Each stock's ________ is likely the best measure of the relationship.

Proctor and Gamble is an example of a blue-chip stock.

When a corporation engages in a stock repurchase, each remaining shareholder owns a smaller proportion of the firm.

Greg Jewell read about several companies that were performing relatively well despite the current recession. Stocks like these, that in some cases actually perform better during downturns in the economy, are called ________ stocks.

Your investment goal is to receive a stream of income from your investment. Which of the following would be important information to determine whether a particular stock purchase would suit your plan?

A(n) ________ is a legal agreement signed by a stockholder allowing someone else to vote on his or her behalf at the corporation's annual meeting.

What factors can effect the market price of a stock?

If your portfolio is very diversified then the beta is of no use to you.

Every company must pay dividends as a portion of the company's profits to its stockholders.

What are proxy fights?

Jessica wanted to gauge stock performance in general. She found a useful tool that measured the stock prices of 30 large industrial firms, called the ________.

Dividends

The letters or characters that represent a stock is known as the stock's ________.

Most of the stocks listed in the Dow Jones Industrials have high P/E ratios and are classified as speculative stocks.

The dividend yield on a share of common stock is ________.

The following equation, (net income ‑preferred stock dividends)/number of shares of common stock outstanding, allows us to calculate the ________ and this information is necessary to calculate the ________ ratio.

Discuss the relationship between growth stocks and income stocks and their P/E ratios.

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

The following equation, (net income ‑preferred stock dividends)/number of shares of common stock outstanding, allows us to calculate the and this information is necessary to calculate the ratio.