Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Because the Dow Jones Index Average is based on the movement of 500 large,well-established stocks,many investors believe it reflects price movements for large firms rather than for the general market.

Accepted Answer

A) True 
 B)False

Question 3

Fundamental analysis looks at which of the following?

Accepted Answer

A)  Future earnings 
B)  Dividends 
C)  Expected levels of interest rates 
D)  The firm's risk 
E)  All of the above 
A)  Future earnings 
B)  Dividends 
C)  Expected levels of interest rates 
D)  The firm's risk 
E)  All of the above

Question 4

Because of her children's immediate financial needs,your aunt Marsha has decided to switch some of her money to high-grade utility company stocks.Her reasoning is that these ________ stocks generally pay relatively high dividends that she will be able to give to her children as they need assistance.

Accepted Answer

A)  growth 
B)  blue-chip 
C)  income 
D)  cyclical 
E)  safe 
A)  growth 
B)  blue-chip 
C)  income 
D)  cyclical 
E)  safe

Question 5

Because the Dow Jones Index Average is based on the movement of only ________ large,well-established stocks,many investors believe it reflects price movements for large firms rather than for the general market.

Accepted Answer

A)  30 
B)  50 
C)  100 
D)  500 
A)  30 
B)  50 
C)  100 
D)  500

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

For investors with a long time in front of them,market volatility is not of great concern today.

Accepted Answer

A) True 
 B)False

Question 8

Because every company is almost certain to experience a bad year or two,holding on to stock for only one year

Accepted Answer

A)  is not a very sound investment decision. 
B)  is a very sound investment decision. 
C)  is a good idea for those who may need to liquidate their investment quickly. 
D)  diversifies one's portfolio risk. 
A)  is not a very sound investment decision. 
B)  is a very sound investment decision. 
C)  is a good idea for those who may need to liquidate their investment quickly. 
D)  diversifies one's portfolio risk.

Question 9

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.

Accepted Answer

A)  $18.75 
B)  $39.75 
C)  $62.50 
D)  $68.50 
A)  $18.75 
B)  $39.75 
C)  $62.50 
D)  $68.50

Question 10

A SWOT analysis

Accepted Answer

A)  is a good way of breaking down a firm's capabilities and gaining a better understanding of what the future may hold for the firm. 
B)  focuses on strengths, weaknesses, opportunities, and threats. 
C)  is designed to better understand a firm's strategies and whether or not the strategies are sustainable. 
D)  both A and C. 
A)  is a good way of breaking down a firm's capabilities and gaining a better understanding of what the future may hold for the firm. 
B)  focuses on strengths, weaknesses, opportunities, and threats. 
C)  is designed to better understand a firm's strategies and whether or not the strategies are sustainable. 
D)  both A and C.

Question 11

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 12

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 13

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 14

According to your text,over time,investing in stocks generally outperforms most other investments.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Technical analysis is a stock valuation technique that incorporates expected future earnings of the company,the riskiness of the companies cash flows,and interest rates in the markets in determining the current value of the stock.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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

Accepted Answer

A)  DAIA 
B)  CMIA 
C)  DJIA 
D)  SPFA 
E)  none of the above 
A)  DAIA 
B)  CMIA 
C)  DJIA 
D)  SPFA 
E)  none of the above

Question 19

Because the DJIA weights stocks based on their relative prices,when a high priced stock moves a small amount on the DJIA,it has a(n)________ impact on the index.

Accepted Answer

A)  limited 
B)  inordinately large 
C)  insignificant 
D)  minute 
A)  limited 
B)  inordinately large 
C)  insignificant 
D)  minute

Question 20

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

Accepted Answer

A)  one 
B)  two 
C)  100 
D)  1,000 
A)  one 
B)  two 
C)  100 
D)  1,000

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

Because the Dow Jones Index Average is based on the movement of 500 large,well-established stocks,many investors believe it reflects price movements for large firms rather than for the general market.

Fundamental analysis looks at which of the following?

Because of her children's immediate financial needs,your aunt Marsha has decided to switch some of her money to high-grade utility company stocks.Her reasoning is that these ________ stocks generally pay relatively high dividends that she will be able to give to her children as they need assistance.

Because the Dow Jones Index Average is based on the movement of only ________ large,well-established stocks,many investors believe it reflects price movements for large firms rather than for the general market.

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

For investors with a long time in front of them,market volatility is not of great concern today.

Because every company is almost certain to experience a bad year or two,holding on to stock for only one year

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.

A SWOT analysis

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?

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

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?

According to your text,over time,investing in stocks generally outperforms most other investments.

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

Technical analysis is a stock valuation technique that incorporates expected future earnings of the company,the riskiness of the companies cash flows,and interest rates in the markets in determining the current value of the stock.

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

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

Because the DJIA weights stocks based on their relative prices,when a high priced stock moves a small amount on the DJIA,it has a(n)________ impact on the index.

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

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

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

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 12: Investing in Stocks

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

Because the Dow Jones Index Average is based on the movement of 500 large,well-established stocks,many investors believe it reflects price movements for large firms rather than for the general market.

Fundamental analysis looks at which of the following?

Because the Dow Jones Index Average is based on the movement of only ________ large,well-established stocks,many investors believe it reflects price movements for large firms rather than for the general market.

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

For investors with a long time in front of them,market volatility is not of great concern today.

Because every company is almost certain to experience a bad year or two,holding on to stock for only one year

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.

A SWOT analysis

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?

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

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?

According to your text,over time,investing in stocks generally outperforms most other investments.

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

Technical analysis is a stock valuation technique that incorporates expected future earnings of the company,the riskiness of the companies cash flows,and interest rates in the markets in determining the current value of the stock.

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

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

Because the DJIA weights stocks based on their relative prices,when a high priced stock moves a small amount on the DJIA,it has a(n)________ impact on the index.

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

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

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

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