Question 1

New stock offerings are called ground floor opportunities.

Accepted Answer

A) True 
 B)False

Question 2

The market price of preferred stock is sensitive to interest rates.

Accepted Answer

A) True 
 B)False

Question 3

The most basic form of ownership in a corporation is

Accepted Answer

A) common stock. 
B) bonds. 
C) securities. 
D) preferred stock. 
A) common stock. 
B) bonds. 
C) securities. 
D) preferred stock.

Question 4

When general interest rates in the economy decline,the market value of bonds decrease.​

Accepted Answer

A) True 
 B)False

Question 5

Buying and selling stocks quickly with the hope that the prices will move enough to cover transaction costs is known as

Accepted Answer

A) short selling. 
B) day trading. 
C) margin trading. 
D) cash trading. 
A) short selling. 
B) day trading. 
C) margin trading. 
D) cash trading.

Question 6

If Moody's downgrades a bond,which of the following would fall?

Accepted Answer

A) Face value 
B) Market price 
C) Coupon rate 
D) Current yield 
A) Face value 
B) Market price 
C) Coupon rate 
D) Current yield

Question 7

Secured bonds are always safer than unsecured bonds.

Accepted Answer

A) True 
 B)False

Question 8

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 amount of Rosa's retained earnings?

Accepted Answer

A) $100,000 
B) $400,000 
C) $550,000 
D) $650,000 
A) $100,000 
B) $400,000 
C) $550,000 
D) $650,000

Question 9

Joel Barber purchased a $1,000 bond for $985.The coupon rate of interest is 8.5 percent,and the bond matures in 10 years.What is Joel's current yield on this bond?

Accepted Answer

A) 9.85 percent 
B) 8.73 percent 
C) 8.50 percent 
D) 8.63 percent 
A) 9.85 percent 
B) 8.73 percent 
C) 8.50 percent 
D) 8.63 percent

Question 10

Which of the following statements regarding Series EE U.S.savings bonds is not true?

Accepted Answer

A) A $100 bond can be purchased for $50. 
B) The interest is usually compounded semiannually. 
C) Interest is tax-free at redemption if the proceeds are used to fund a child's college education. 
D) The interest on the bonds is paid out semiannually. 
A) A $100 bond can be purchased for $50. 
B) The interest is usually compounded semiannually. 
C) Interest is tax-free at redemption if the proceeds are used to fund a child's college education. 
D) The interest on the bonds is paid out semiannually.

Question 11

Beta is a ratio measure of an investment's price volatility or risk compared with a specific market index,usually for similar investments.

Accepted Answer

A) True 
 B)False

Question 12

Use the following stock listing for transactions on December 12 to answer the questions:
  
-On December 12,QPZ closed ____ lower than its 52-week high

Accepted Answer

A)  $0.50 
B)  $0.75 
C)  $1.00 
D)  $1.38 
A)  $0.50 
B)  $0.75 
C)  $1.00 
D)  $1.38

Question 13

Shareholders' equity is the same thing as the market value of all outstanding stock.

Accepted Answer

A) True 
 B)False

Question 14

The most accurate market index for an investor who invests in large,well-known companies would be the

Accepted Answer

A) Dow Jones Industrial Average. 
B) Standard & Poor's 500. 
C) NASDAQ Composite Index. 
D) Nikkei Dow. 
A) Dow Jones Industrial Average. 
B) Standard & Poor's 500. 
C) NASDAQ Composite Index. 
D) Nikkei Dow.

Question 15

Which of the following is not true regarding U.S.government securities?

Accepted Answer

A) They can be purchased directly from the government or through a broker. 
B) Interest income is tax exempt from state and local taxes. 
C) Interest rates are lower than rates on corporate bonds. 
D) You receive certificates for the bonds purchased. 
A) They can be purchased directly from the government or through a broker. 
B) Interest income is tax exempt from state and local taxes. 
C) Interest rates are lower than rates on corporate bonds. 
D) You receive certificates for the bonds purchased.

Question 16

Which of the following statements is not true regarding cash dividends?

Accepted Answer

A) Cash dividends are generally paid out of current earnings. 
B) Cash dividends are normally paid semiannually. 
C) Cash dividends are normally paid four times per corporate year. 
D) The amount of the cash dividend is determined by the board of directors of the company. 
A) Cash dividends are generally paid out of current earnings. 
B) Cash dividends are normally paid semiannually. 
C) Cash dividends are normally paid four times per corporate year. 
D) The amount of the cash dividend is determined by the board of directors of the company.

Question 17

A common stockholder would receive corporate assets only after the claims of bondholders and preferred stockholders were satisfied.

Accepted Answer

A) True 
 B)False

Question 18

You should consider selling a bond before maturity when the bond rating has seriously slipped.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements regarding the price/earnings ratio (P/E ratio) is false?

Accepted Answer

A) The P/E ratio is a measure of a stock's relative price. 
B) P/E ratios should be compared among firms in the same industry. 
C) P/E ratios for most corporations have ranged between 5 and 10. 
D) A relatively low P/E ratio indicates that investors expect sluggish growth or an uncertain future. 
A) The P/E ratio is a measure of a stock's relative price. 
B) P/E ratios should be compared among firms in the same industry. 
C) P/E ratios for most corporations have ranged between 5 and 10. 
D) A relatively low P/E ratio indicates that investors expect sluggish growth or an uncertain future.

Question 20

The after-tax earnings of a corporation that are not paid out to stockholders are called

Accepted Answer

A) retained earnings. 
B) preferred earnings. 
C) stock dividends. 
D) cash dividends. 
A) retained earnings. 
B) preferred earnings. 
C) stock dividends. 
D) cash dividends.

New stock offerings are called ground floor opportunities.

The market price of preferred stock is sensitive to interest rates.

The most basic form of ownership in a corporation is

When general interest rates in the economy decline,the market value of bonds decrease.

Buying and selling stocks quickly with the hope that the prices will move enough to cover transaction costs is known as

If Moody's downgrades a bond,which of the following would fall?

Secured bonds are always safer than unsecured bonds.

Joel Barber purchased a $1,000 bond for $985.The coupon rate of interest is 8.5 percent,and the bond matures in 10 years.What is Joel's current yield on this bond?

Which of the following statements regarding Series EE U.S.savings bonds is not true?

Beta is a ratio measure of an investment's price volatility or risk compared with a specific market index,usually for similar investments.

Use the following stock listing for transactions on December 12 to answer the questions: -On December 12,QPZ closed ____ lower than its 52-week high

Shareholders' equity is the same thing as the market value of all outstanding stock.

The most accurate market index for an investor who invests in large,well-known companies would be the

Which of the following is not true regarding U.S.government securities?

Which of the following statements is not true regarding cash dividends?

A common stockholder would receive corporate assets only after the claims of bondholders and preferred stockholders were satisfied.

You should consider selling a bond before maturity when the bond rating has seriously slipped.

Which of the following statements regarding the price/earnings ratio (P/E ratio) is false?

The after-tax earnings of a corporation that are not paid out to stockholders are called

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

New stock offerings are called ground floor opportunities.

The market price of preferred stock is sensitive to interest rates.

The most basic form of ownership in a corporation is

When general interest rates in the economy decline,the market value of bonds decrease.​

Buying and selling stocks quickly with the hope that the prices will move enough to cover transaction costs is known as

If Moody's downgrades a bond,which of the following would fall?

Secured bonds are always safer than unsecured bonds.

Joel Barber purchased a $1,000 bond for $985.The coupon rate of interest is 8.5 percent,and the bond matures in 10 years.What is Joel's current yield on this bond?

Which of the following statements regarding Series EE U.S.savings bonds is not true?

Beta is a ratio measure of an investment's price volatility or risk compared with a specific market index,usually for similar investments.

Use the following stock listing for transactions on December 12 to answer the questions: -On December 12,QPZ closed ____ lower than its 52-week high

Shareholders' equity is the same thing as the market value of all outstanding stock.

The most accurate market index for an investor who invests in large,well-known companies would be the

Which of the following is not true regarding U.S.government securities?

Which of the following statements is not true regarding cash dividends?

A common stockholder would receive corporate assets only after the claims of bondholders and preferred stockholders were satisfied.

You should consider selling a bond before maturity when the bond rating has seriously slipped.

Which of the following statements regarding the price/earnings ratio (P/E ratio) is false?

The after-tax earnings of a corporation that are not paid out to stockholders are called

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

When general interest rates in the economy decline,the market value of bonds decrease.