Question 1

A private corporation is a corporation whose stock is owned by relatively few people and is not traded openly in the stock market.

Accepted Answer

A) True 
 B)False

Question 2

Equity financing is a popular choice to provide long-term financing for a corporation because

Accepted Answer

A) a lender is always available to provide this type of financing. 
B) it does not have to be repaid. 
C) repayment doesn't have to be made for ten years or more. 
D) only interest must be paid for the first five years. 
E) it does not cost anything to sell in the primary market. 
A) a lender is always available to provide this type of financing. 
B) it does not have to be repaid. 
C) repayment doesn't have to be made for ten years or more. 
D) only interest must be paid for the first five years. 
E) it does not cost anything to sell in the primary market.

Question 3

A long-term investment technique used by investors to purchase stock without paying a commission to a broker is called

Accepted Answer

A) dollar cost appreciation. 
B) direct investment plan. 
C) unregulated transaction. 
D) regulated transaction. 
E) over-the-counter transaction. 
A) dollar cost appreciation. 
B) direct investment plan. 
C) unregulated transaction. 
D) regulated transaction. 
E) over-the-counter transaction.

Question 4

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock.

Accepted Answer

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

Question 5

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called a

Accepted Answer

A) dollar cost averaging. 
B) dividend reinvestment plan. 
C) buy and hold technique. 
D) regulated transaction. 
E) secured transaction. 
A) dollar cost averaging. 
B) dividend reinvestment plan. 
C) buy and hold technique. 
D) regulated transaction. 
E) secured transaction.

Question 6

The minimum commission charged by most brokerage firms for buying or selling stock is between $50 and $75.

Accepted Answer

A) True 
 B)False

Question 7

Which one of the following is not a true statement?

Accepted Answer

A) The over-the-counter market is a network of dealers who buy and sell the securities of corporations that are not listed on a securities exchange. 
B) Account executives in the OTC market specialize or make a market in the securities of one or more specific firms. 
C) Most OTC trading is conducted in person in the account executive's office. 
D) Since 1971, account executives' operating in the OTC market have used an electronic quotation system called NASDAQ. 
E) NASDAQ is regulated by the National Association of Securities Dealers. 
A) The over-the-counter market is a network of dealers who buy and sell the securities of corporations that are not listed on a securities exchange. 
B) Account executives in the OTC market specialize or make a market in the securities of one or more specific firms. 
C) Most OTC trading is conducted in person in the account executive's office. 
D) Since 1971, account executives' operating in the OTC market have used an electronic quotation system called NASDAQ. 
E) NASDAQ is regulated by the National Association of Securities Dealers.

Question 8

Laws which are enforced by a federal regulatory body for the securities industry have been put in place to protect investors.

Accepted Answer

A) True 
 B)False

Question 9

John Baker bought BCE stocks for $33 a share one year ago.He sold the stock a year later for $36.50 a share.What was John's capital gains yield?

Accepted Answer

A) 3 percent 
B) 3.50 percent 
C) 4 percent 
D) 9 percent 
E) 10.6 percent 
A) 3 percent 
B) 3.50 percent 
C) 4 percent 
D) 9 percent 
E) 10.6 percent

Question 10

Why would an investor favor a common share over a preferred share?

Accepted Answer

A) To obtain a bigger potential capital gain. 
B) To obtain repayment of the face value at maturity. 
C) To obtain a fixed dividend. 
D) To obtain a fixed coupon payment. 
E) To obtain a variable dividend 
A) To obtain a bigger potential capital gain. 
B) To obtain repayment of the face value at maturity. 
C) To obtain a fixed dividend. 
D) To obtain a fixed coupon payment. 
E) To obtain a variable dividend

Question 11

The federal government requires corporations selling new issues of securities to disclose information about corporate earnings, assets and liabilities, products or services, and the qualifications of top management in a prospectus.

Accepted Answer

A) True 
 B)False

Question 12

The term churning is to describe the excessive buying and selling of securities to generate commissions.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is not true?

Accepted Answer

A) When an investor buys stocks and assumes they will increase in value, he or she is using a procedure called buying long. 
B) Selling short is selling stock that has been borrowed from a stockbroker or brokerage firm. 
C) When you sell short, you buy today, knowing that you must sell or cover your short transaction at a later date. 
D) In a short transaction, if the stock increases in value, the investor loses money. 
E) To make money in a short transaction, you must be correct in predicting that a stock will decrease in value. 
A) When an investor buys stocks and assumes they will increase in value, he or she is using a procedure called buying long. 
B) Selling short is selling stock that has been borrowed from a stockbroker or brokerage firm. 
C) When you sell short, you buy today, knowing that you must sell or cover your short transaction at a later date. 
D) In a short transaction, if the stock increases in value, the investor loses money. 
E) To make money in a short transaction, you must be correct in predicting that a stock will decrease in value.

Question 14

The annual shareholder return is the beginning-of-year stock price divided by the stocks annual dividend.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a long-term stock investment technique?

Accepted Answer

A) Purchasing on margin 
B) Selling short 
C) Dollar cost averaging 
D) Trading in options 
E) Buy low, sell high 
A) Purchasing on margin 
B) Selling short 
C) Dollar cost averaging 
D) Trading in options 
E) Buy low, sell high

Question 16

A penny stock typically sells for ___________

Accepted Answer

A) $.01/share 
B) Less than $.10/share 
C) Less than $.50/share 
D) Less than $1.00/share 
E) less than $10/share 
A) $.01/share 
B) Less than $.10/share 
C) Less than $.50/share 
D) Less than $1.00/share 
E) less than $10/share

Question 17

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Accepted Answer

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

Question 18

Which of the following statements is not true?

Accepted Answer

A) When buying stock on margin, an investor borrows part of the money necessary to buy a particular stock. 
B) Usually, the brokerage firm lends the money or arranges for the loan in a margin transaction. 
C) Investors buy on margin because doing so offers them the potential for greater profits. 
D) The margin requirement is set by the exchanges. 
E) The current margin requirement is identical for all exchanges. 
A) When buying stock on margin, an investor borrows part of the money necessary to buy a particular stock. 
B) Usually, the brokerage firm lends the money or arranges for the loan in a margin transaction. 
C) Investors buy on margin because doing so offers them the potential for greater profits. 
D) The margin requirement is set by the exchanges. 
E) The current margin requirement is identical for all exchanges.

Question 19

Colin owns 100 shares of RIM stock.He purchased the stock for $100 a share.He sold the stock for $75 a share.The commissions required to buy and sell the stock totaled $60.Assuming that he received no dividends during the time he owned the stock, what is his total profit or loss from this transaction?

Accepted Answer

A) Profit $2,500 
B) Profit $60.00 
C) Loss $2,500 
D) Loss $2,560 
E) Loss $2,440 
A) Profit $2,500 
B) Profit $60.00 
C) Loss $2,500 
D) Loss $2,560 
E) Loss $2,440

Question 20

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Accepted Answer

A) option 
B) call 
C) margin 
D) blue-chip 
E) put 
A) option 
B) call 
C) margin 
D) blue-chip 
E) put

A private corporation is a corporation whose stock is owned by relatively few people and is not traded openly in the stock market.

Equity financing is a popular choice to provide long-term financing for a corporation because

A long-term investment technique used by investors to purchase stock without paying a commission to a broker is called

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock.

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called a

The minimum commission charged by most brokerage firms for buying or selling stock is between $50 and $75.

Which one of the following is not a true statement?

Laws which are enforced by a federal regulatory body for the securities industry have been put in place to protect investors.

John Baker bought BCE stocks for $33 a share one year ago.He sold the stock a year later for $36.50 a share.What was John's capital gains yield?

Why would an investor favor a common share over a preferred share?

The federal government requires corporations selling new issues of securities to disclose information about corporate earnings, assets and liabilities, products or services, and the qualifications of top management in a prospectus.

The term churning is to describe the excessive buying and selling of securities to generate commissions.

Which of the following statements is not true?

The annual shareholder return is the beginning-of-year stock price divided by the stocks annual dividend.

Which of the following is a long-term stock investment technique?

A penny stock typically sells for ___________

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Which of the following statements is not true?

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters

Exam 11: Investing in Stocks

A private corporation is a corporation whose stock is owned by relatively few people and is not traded openly in the stock market.

Equity financing is a popular choice to provide long-term financing for a corporation because

A long-term investment technique used by investors to purchase stock without paying a commission to a broker is called

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock.

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called a

The minimum commission charged by most brokerage firms for buying or selling stock is between $50 and $75.

Which one of the following is not a true statement?

Laws which are enforced by a federal regulatory body for the securities industry have been put in place to protect investors.

John Baker bought BCE stocks for $33 a share one year ago.He sold the stock a year later for $36.50 a share.What was John's capital gains yield?

Why would an investor favor a common share over a preferred share?

The federal government requires corporations selling new issues of securities to disclose information about corporate earnings, assets and liabilities, products or services, and the qualifications of top management in a prospectus.

The term churning is to describe the excessive buying and selling of securities to generate commissions.

Which of the following statements is not true?

The annual shareholder return is the beginning-of-year stock price divided by the stocks annual dividend.

Which of the following is a long-term stock investment technique?

A penny stock typically sells for ___________

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Which of the following statements is not true?

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters