Question 1

Which of the following information about specific companies must be issued only when a new security is issued?

Accepted Answer

A) Annual report 
B) 10-K report 
C) Prospectus 
D) Both 10-K report and prospectus 
A) Annual report 
B) 10-K report 
C) Prospectus 
D) Both 10-K report and prospectus

Question 2

Portfolio tracking permits you to enter the symbols of the stocks you own and the number of shares held that you wish to follow; the software then automatically updates the value of your portfolio.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following types of investments can potentially provide tax-exempt interest if the principal and interest are used to pay a child's college education?

Accepted Answer

A) Certificates of deposit 
B) A government-issued super NOW account 
C) Series EE U.S. government bonds 
D) Money market mutual fund 
A) Certificates of deposit 
B) A government-issued super NOW account 
C) Series EE U.S. government bonds 
D) Money market mutual fund

Question 4

Companies that consistently pay out higher than average cash dividends are classified as ____ stocks.

Accepted Answer

A) income 
B) blue-chip 
C) Growth 
D) defensive 
A) income 
B) blue-chip 
C) Growth 
D) defensive

Question 5

____ bonds are particularly advantageous to investors when utilized in an IRA or a (k) tax-deferred investment.

Accepted Answer

A) Zero-coupon 
B) U.S. Treasury 
C) Municipal 
D) Federal agency 
A) Zero-coupon 
B) U.S. Treasury 
C) Municipal 
D) Federal agency

Question 6

Both trailing and projected P/E ratios are of interest to investors.

Accepted Answer

A) True 
 B)False

Question 7

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
  
-What is the dividend payout ratio for Rosa's?

Accepted Answer

A) 0.08 
B) 0.13 
C) 0.27 
D) 0.43 
A) 0.08 
B) 0.13 
C) 0.27 
D) 0.43

Question 8

Which of the following statements regarding cash dividends is true?

Accepted Answer

A) Growth and speculative companies typically pay little or no cash dividends. 
B) Cash dividends to common and preferred stockholders are variable amounts. 
C) Cash dividends are guaranteed payments to preferred and common stockholders. 
D) All after-tax earnings of a corporation must be paid out to the common and preferred stockholders. 
A) Growth and speculative companies typically pay little or no cash dividends. 
B) Cash dividends to common and preferred stockholders are variable amounts. 
C) Cash dividends are guaranteed payments to preferred and common stockholders. 
D) All after-tax earnings of a corporation must be paid out to the common and preferred stockholders.

Question 9

The rate of interest paid on bond investments is called the coupon rate.

Accepted Answer

A) True 
 B)False

Question 10

Both interest and capital gain income on municipal bonds are exempt from federal income taxes.

Accepted Answer

A) True 
 B)False

Question 11

Toni and Felix are considering buying stock. They would like to purchase 600 shares of Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past year:
  
-What is the dividend payout ratio for Sudsy Soap?

Accepted Answer

A) 5.0 
B) 2.5 
C) 0.5 
D) 0.05 
A) 5.0 
B) 2.5 
C) 0.5 
D) 0.05

Question 12

____ represents the total market value of the estimated 3,776 publicly traded stocks.

Accepted Answer

A) Dow Jones Industrial Average 
B) NASDAQ Composite Index 
C) Wilshire 5000 Index 
D) New York Stock Exchange Composite 
A) Dow Jones Industrial Average 
B) NASDAQ Composite Index 
C) Wilshire 5000 Index 
D) New York Stock Exchange Composite

Question 13

A(n) ____ order must be monitored very carefully.

Accepted Answer

A) day 
B) good-til-cancelled 
C) fill-or-kill 
D) week 
A) day 
B) good-til-cancelled 
C) fill-or-kill 
D) week

Question 14

Buying on margin will prevent losses.

Accepted Answer

A) True 
 B)False

Question 15

The current yield on a bond can be either higher or lower than its coupon rate of return.

Accepted Answer

A) True 
 B)False

Question 16

The claims of security owners in a corporation are satisfied in the following order:

Accepted Answer

A) bondholders, preferred stockholders, common stockholders. 
B) preferred stockholders, bondholders, common stockholders. 
C) common stockholders, bondholders, preferred stockholders. 
D) bondholders, common stockholders, preferred stockholders. 
A) bondholders, preferred stockholders, common stockholders. 
B) preferred stockholders, bondholders, common stockholders. 
C) common stockholders, bondholders, preferred stockholders. 
D) bondholders, common stockholders, preferred stockholders.

Question 17

Which of the following is simply an estimate based on projected future earnings?

Accepted Answer

A) dividend yield 
B) trailing P/E ratio 
C) forward P/E ratio 
D) earnings per share 
A) dividend yield 
B) trailing P/E ratio 
C) forward P/E ratio 
D) earnings per share

Question 18

Capital gains on the sale of municipal bonds are taxable and will occur when bonds are purchased

Accepted Answer

A) at a discount and then sold at a higher price. 
B) at a discount and then redeemed for full value at maturity. 
C) in an IRA account. 
D) at a discount and then sold at a higher price at full value at maturity. 
A) at a discount and then sold at a higher price. 
B) at a discount and then redeemed for full value at maturity. 
C) in an IRA account. 
D) at a discount and then sold at a higher price at full value at maturity.

Question 19

Unsecured bonds are called ____ bonds.

Accepted Answer

A) mortgage 
B) collateral trust 
C) equipment 
D) debenture 
A) mortgage 
B) collateral trust 
C) equipment 
D) debenture

Question 20

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
  
-What are the earnings per share for Rosa's?

Accepted Answer

A) $2.00 
B) $2.34 
C) $3.50 
D) $3.75 
A) $2.00 
B) $2.34 
C) $3.50 
D) $3.75

Which of the following information about specific companies must be issued only when a new security is issued?

Portfolio tracking permits you to enter the symbols of the stocks you own and the number of shares held that you wish to follow; the software then automatically updates the value of your portfolio.

Which of the following types of investments can potentially provide tax-exempt interest if the principal and interest are used to pay a child's college education?

Companies that consistently pay out higher than average cash dividends are classified as ____ stocks.

____ bonds are particularly advantageous to investors when utilized in an IRA or a (k) tax-deferred investment.

Both trailing and projected P/E ratios are of interest to investors.

Which of the following statements regarding cash dividends is true?

The rate of interest paid on bond investments is called the coupon rate.

Both interest and capital gain income on municipal bonds are exempt from federal income taxes.

Toni and Felix are considering buying stock. They would like to purchase 600 shares of Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past year: -What is the dividend payout ratio for Sudsy Soap?

____ represents the total market value of the estimated 3,776 publicly traded stocks.

A(n) ____ order must be monitored very carefully.

Buying on margin will prevent losses.

The current yield on a bond can be either higher or lower than its coupon rate of return.

The claims of security owners in a corporation are satisfied in the following order:

Which of the following is simply an estimate based on projected future earnings?

Capital gains on the sale of municipal bonds are taxable and will occur when bonds are purchased

Unsecured bonds are called ____ bonds.

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investment Fundamentals

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters

Exam 14: Investing in Stocks and Bonds

Which of the following information about specific companies must be issued only when a new security is issued?

Portfolio tracking permits you to enter the symbols of the stocks you own and the number of shares held that you wish to follow; the software then automatically updates the value of your portfolio.

Which of the following types of investments can potentially provide tax-exempt interest if the principal and interest are used to pay a child's college education?

Companies that consistently pay out higher than average cash dividends are classified as ____ stocks.

____ bonds are particularly advantageous to investors when utilized in an IRA or a (k) tax-deferred investment.

Both trailing and projected P/E ratios are of interest to investors.

Which of the following statements regarding cash dividends is true?

The rate of interest paid on bond investments is called the coupon rate.

Both interest and capital gain income on municipal bonds are exempt from federal income taxes.

Toni and Felix are considering buying stock. They would like to purchase 600 shares of Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past year: -What is the dividend payout ratio for Sudsy Soap?

____ represents the total market value of the estimated 3,776 publicly traded stocks.

A(n) ____ order must be monitored very carefully.

Buying on margin will prevent losses.

The current yield on a bond can be either higher or lower than its coupon rate of return.

The claims of security owners in a corporation are satisfied in the following order:

Which of the following is simply an estimate based on projected future earnings?

Capital gains on the sale of municipal bonds are taxable and will occur when bonds are purchased

Unsecured bonds are called ____ bonds.

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investment Fundamentals

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters