Question 1

Stock splits increase the number of the shares you own, but decrease the value of your total holdings with the company

Accepted Answer

A) True 
 B)False

Question 2

ComChip is a computer chip manufacturer whose stock is selling at $50 per share. Next year's net earnings, minus the preferred stock dividends, is estimated to be $200,000. The company currently has 100,000 shares of common stock outstanding. What is the firm's P/E ratio?

Accepted Answer

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

Question 3

If you purchase stock of big companies like Proctor & Gamble, General Electric, and Texaco you would be buying shares of ________ stocks.

Accepted Answer

A)  blue-chip 
B)  true-blue 
C)  mini-caps 
D)  speculative 
A)  blue-chip 
B)  true-blue 
C)  mini-caps 
D)  speculative

Question 4

Marian read in a financial magazine that the discounted dividends valuation model of common stock defines the value of a share of common stock as the ________ value of the infinite stream of future ________.

Accepted Answer

A)  future; growth 
B)  future; earnings 
C)  dividend; earnings 
D)  present; dividends 
E)  present; earnings 
A)  future; growth 
B)  future; earnings 
C)  dividend; earnings 
D)  present; dividends 
E)  present; earnings

Question 5

A stock market characterized by ________ prices is termed a bear market.

Accepted Answer

A)  falling 
B)  rising 
C)  steady 
D)  none of the above 
A)  falling 
B)  rising 
C)  steady 
D)  none of the above

Question 6

Common stockholders have a superior claim on a company's assets over creditors and bondholders.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

As compared to growth stocks, income stocks pay ________ dividends with ________ growth in earnings.

Accepted Answer

A)  relatively high; relatively high 
B)  the same; relatively high 
C)  relatively high; relatively little 
D)  relatively high; moderate 
E)  relatively high; the same 
A)  relatively high; relatively high 
B)  the same; relatively high 
C)  relatively high; relatively little 
D)  relatively high; moderate 
E)  relatively high; the same

Question 9

According to your text, there is very little validation in using technical analysis as an investing tool.

Accepted Answer

A) True 
 B)False

Question 10

Is a positive stock split good for the current share holders?

Accepted Answer

Yes, for the most part a positive stock

Question 11

The price/earnings ratio is an indication of how much investors are willing to pay for a dollar of the company's earnings.

Accepted Answer

A) True 
 B)False

Question 12

Abby previously owned 200 shares of NEWAGE stock at $25 per share. Today the company split the stock in a 3:1 split. Now what is the value of Abby's stock?

Accepted Answer

A)  $5,000 
B)  $6,000 
C)  $2,500 
D)  $200 
A)  $5,000 
B)  $6,000 
C)  $2,500 
D)  $200

Question 13

A stock currently selling for $105 with estimated earnings per share of $5.25 would have a P/E ratio of

Accepted Answer

A)  10 
B)  12 
C)  20 
D)  28 
E)  30 
A)  10 
B)  12 
C)  20 
D)  28 
E)  30

Question 14

Which stock index will have the largest representation of small-, mid‑and large -cap stocks?

Accepted Answer

A)  DJIA 
B)  S&P 500 
C)  Wilshire 5000 
D)  None of the above 
A)  DJIA 
B)  S&P 500 
C)  Wilshire 5000 
D)  None of the above

Question 15

Earnings per share is a ratio that describes the amount of net income less preferred stock dividends available to the common shareholders.

Accepted Answer

A) True 
 B)False

Question 16

For several years you have been using charts and computer programs to project trends in the stock market. You are engaging in what type of analysis?

Accepted Answer

A)  dollar cost averaging 
B)  technical 
C)  fundamental 
D)  Price/Earnings 
E)  none of the above 
A)  dollar cost averaging 
B)  technical 
C)  fundamental 
D)  Price/Earnings 
E)  none of the above

Question 17

The P/E ratio approach is a type of fundamental analysis.

Accepted Answer

A) True 
 B)False

Question 18

The dividend yield tells investors which of the following?

Accepted Answer

A)  What their portfolio is worth on the open market 
B)  How much in the way of a return they would receive if the stock price and the dividend level remain constant 
C)  When the company will be releasing dividends 
D)  How much in total the company has available to pay out in dividends 
E)  none of the above 
A)  What their portfolio is worth on the open market 
B)  How much in the way of a return they would receive if the stock price and the dividend level remain constant 
C)  When the company will be releasing dividends 
D)  How much in total the company has available to pay out in dividends 
E)  none of the above

Question 19

Brenda is a 25 year old investor who recently graduated from college and has a successful career, which type of stock should represent a good portion of her portfolio?

Accepted Answer

A)  growth stocks 
B)  defensive stocks 
C)  income stocks 
D)  risk-free stocks 
A)  growth stocks 
B)  defensive stocks 
C)  income stocks 
D)  risk-free stocks

Question 20

Beta is the measure of how responsive a stock is to changes in the market portfolios, like the S&P 500.

Accepted Answer

A) True 
 B)False

Stock splits increase the number of the shares you own, but decrease the value of your total holdings with the company

ComChip is a computer chip manufacturer whose stock is selling at $50 per share. Next year's net earnings, minus the preferred stock dividends, is estimated to be $200,000. The company currently has 100,000 shares of common stock outstanding. What is the firm's P/E ratio?

If you purchase stock of big companies like Proctor & Gamble, General Electric, and Texaco you would be buying shares of ________ stocks.

Marian read in a financial magazine that the discounted dividends valuation model of common stock defines the value of a share of common stock as the value of the infinite stream of future .

A stock market characterized by ________ prices is termed a bear market.

Common stockholders have a superior claim on a company's assets over creditors and bondholders.

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

As compared to growth stocks, income stocks pay dividends with growth in earnings.

According to your text, there is very little validation in using technical analysis as an investing tool.

Is a positive stock split good for the current share holders?

The price/earnings ratio is an indication of how much investors are willing to pay for a dollar of the company's earnings.

Abby previously owned 200 shares of NEWAGE stock at $25 per share. Today the company split the stock in a 3:1 split. Now what is the value of Abby's stock?

A stock currently selling for $105 with estimated earnings per share of $5.25 would have a P/E ratio of

Which stock index will have the largest representation of small-, mid‑and large -cap stocks?

Earnings per share is a ratio that describes the amount of net income less preferred stock dividends available to the common shareholders.

For several years you have been using charts and computer programs to project trends in the stock market. You are engaging in what type of analysis?

The P/E ratio approach is a type of fundamental analysis.

The dividend yield tells investors which of the following?

Brenda is a 25 year old investor who recently graduated from college and has a successful career, which type of stock should represent a good portion of her portfolio?

Beta is the measure of how responsive a stock is to changes in the market portfolios, like the S&P 500.

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

Stock splits increase the number of the shares you own, but decrease the value of your total holdings with the company

ComChip is a computer chip manufacturer whose stock is selling at $50 per share. Next year's net earnings, minus the preferred stock dividends, is estimated to be $200,000. The company currently has 100,000 shares of common stock outstanding. What is the firm's P/E ratio?

If you purchase stock of big companies like Proctor & Gamble, General Electric, and Texaco you would be buying shares of ________ stocks.

Marian read in a financial magazine that the discounted dividends valuation model of common stock defines the value of a share of common stock as the ________ value of the infinite stream of future ________.

A stock market characterized by ________ prices is termed a bear market.

Common stockholders have a superior claim on a company's assets over creditors and bondholders.

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

As compared to growth stocks, income stocks pay ________ dividends with ________ growth in earnings.

According to your text, there is very little validation in using technical analysis as an investing tool.

Is a positive stock split good for the current share holders?

The price/earnings ratio is an indication of how much investors are willing to pay for a dollar of the company's earnings.

Abby previously owned 200 shares of NEWAGE stock at $25 per share. Today the company split the stock in a 3:1 split. Now what is the value of Abby's stock?

A stock currently selling for $105 with estimated earnings per share of $5.25 would have a P/E ratio of

Which stock index will have the largest representation of small-, mid‑and large -cap stocks?

Earnings per share is a ratio that describes the amount of net income less preferred stock dividends available to the common shareholders.

For several years you have been using charts and computer programs to project trends in the stock market. You are engaging in what type of analysis?

The P/E ratio approach is a type of fundamental analysis.

The dividend yield tells investors which of the following?

Brenda is a 25 year old investor who recently graduated from college and has a successful career, which type of stock should represent a good portion of her portfolio?

Beta is the measure of how responsive a stock is to changes in the market portfolios, like the S&P 500.

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

Marian read in a financial magazine that the discounted dividends valuation model of common stock defines the value of a share of common stock as the value of the infinite stream of future .

As compared to growth stocks, income stocks pay dividends with growth in earnings.