Question 1

When a corporation sells stock to the general public for the first time, it is referred to as a(n):

Accepted Answer

A)  primary market opportunity. 
B)  secondary market offering. 
C)  initial public offering. 
D)  investment bank offering. 
E)  primary stockholder opportunity. 
A)  primary market opportunity. 
B)  secondary market offering. 
C)  initial public offering. 
D)  investment bank offering. 
E)  primary stockholder opportunity.

Question 2

Dividends remain with the stock until:

Accepted Answer

A)  two business days before the date of record. 
B)  two business days after the date of record. 
C)  three days before the date of record. 
D)  three days after the date of record. 
E)  three days before the actual payment date. 
A)  two business days before the date of record. 
B)  two business days after the date of record. 
C)  three days before the date of record. 
D)  three days after the date of record. 
E)  three days before the actual payment date.

Question 3

A blue-chip stock is too speculative for most investors.

Accepted Answer

A) True 
 B)False

Question 4

Matthew Boyd has saved $10,000 and wants to invest in common stock. Identify three investment methods he could use and briefly explain how each of those methods works.

Accepted Answer

1. Direct Stock Purchase: Matthew could

Question 5

Arnell Johnson bought 200 shares of Black Petroleum Company for $95 per share and paid a commission of $60. He sold the stock five years later for $120 per share and paid $75 commission. While he held the stock, it paid a dividend of $5.50 per share. What was Arnell's total dollar return on this stock?

Accepted Answer

A)  $5,000 
B)  $4,865 
C)  $1,100 
D)  $6,100 
E)  $5,965 
A)  $5,000 
B)  $4,865 
C)  $1,100 
D)  $6,100 
E)  $5,965

Question 6

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 7

Which type of preferred stock can be exchanged for common stock at the stockholder's option?

Accepted Answer

A)  None of these 
B)  Convertible 
C)  Participating 
D)  Cumulative 
E)  Callable 
A)  None of these 
B)  Convertible 
C)  Participating 
D)  Cumulative 
E)  Callable

Question 8

Book value per share is determined by:

Accepted Answer

A)  deducting liabilities from assets and dividing the remainder by owner's equity. 
B)  deducting liabilities from assets and dividing the remainder by the number of shares of stock outstanding. 
C)  dividing liabilities by the number of shares of stock outstanding. 
D)  dividing assets by the number of shares of stock outstanding. 
E)  dividing the sum of assets and owner's equity by the number of shares of stock outstanding. 
A)  deducting liabilities from assets and dividing the remainder by owner's equity. 
B)  deducting liabilities from assets and dividing the remainder by the number of shares of stock outstanding. 
C)  dividing liabilities by the number of shares of stock outstanding. 
D)  dividing assets by the number of shares of stock outstanding. 
E)  dividing the sum of assets and owner's equity by the number of shares of stock outstanding.

Question 9

Common stock dividends are paid out of profits and:

Accepted Answer

A)  must be approved by the firm's board of directors. 
B)  are guaranteed to be paid quarterly. 
C)  are paid prior to the firm's taxes. 
D)  usually paid semi-annually. 
E)  equal 100 percent of the firm's annual earnings. 
A)  must be approved by the firm's board of directors. 
B)  are guaranteed to be paid quarterly. 
C)  are paid prior to the firm's taxes. 
D)  usually paid semi-annually. 
E)  equal 100 percent of the firm's annual earnings.

Question 10

An investment theory based on the assumption that stock price movements are purely random is called the ____________ theory.

Accepted Answer

A)  fundamental 
B)  technical 
C)  efficient market 
D)  primary 
E)  market 
A)  fundamental 
B)  technical 
C)  efficient market 
D)  primary 
E)  market

Question 11

A proxy is a legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individual or individuals.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  penny 
B)  cyclical 
C)  growth 
D)  small cap 
E)  blue chip 
A)  penny 
B)  cyclical 
C)  growth 
D)  small cap 
E)  blue chip

Question 13

Assume the beta for the stock market in general is 1.0 and the beta for World-Wide Television Productions is 2.4. If the stock market increases in value by 10 percent, what is the expected increase in value for the World-Wide Productions stock?

Accepted Answer

A)  12 percent 
B)  20 percent 
C)  24 percent 
D)  48 percent 
E)  14 percent 
A)  12 percent 
B)  20 percent 
C)  24 percent 
D)  48 percent 
E)  14 percent

Question 14

Which one of the following statements is false?

Accepted Answer

A)  Numerical measures can help investors decide if it is time to buy or sell a stock. 
B)  Future earnings may be one of the most significant measures to examine when evaluating a stock. 
C)  Higher earnings generally equate to higher stock value. 
D)  Corporate earnings are reported in a firm's annual report. 
E)  To date, it is impossible to determine corporate earnings by using the internet. 
A)  Numerical measures can help investors decide if it is time to buy or sell a stock. 
B)  Future earnings may be one of the most significant measures to examine when evaluating a stock. 
C)  Higher earnings generally equate to higher stock value. 
D)  Corporate earnings are reported in a firm's annual report. 
E)  To date, it is impossible to determine corporate earnings by using the internet.

Question 15

A large-cap stock is a stock issued by a company that has a capitalization in excess of how much?

Accepted Answer

A)  $10 billion 
B)  $20 billion 
C)  $30 billion 
D)  $40 billion 
E)  $50 billion 
A)  $10 billion 
B)  $20 billion 
C)  $30 billion 
D)  $40 billion 
E)  $50 billion

Question 16

Mellon Manufacturing has after-tax income of $3 million. It also has 2 million shares of stock outstanding. What is the firm's earnings per share?

Accepted Answer

A)  $3.00 
B)  $2.00 
C)  $1.50 
D)  $0.67 
E)  $0.75 
A)  $3.00 
B)  $2.00 
C)  $1.50 
D)  $0.67 
E)  $0.75

Question 17

The record date is the date that the actual dividend payment is made to stockholders.

Accepted Answer

A) True 
 B)False

Question 18

It is common for professional advisory services like Morningstar, Standard & Poor's, and Value Line to charge for more detailed financial information than provided on other Internet Websites.

Accepted Answer

A) True 
 B)False

Question 19

Stocks issued by large corporations in mature industries often have high P-E ratios.

Accepted Answer

A) True 
 B)False

Question 20

A request that a stock be bought or sold at a specified price is called a ____________ order.

Accepted Answer

A)  market 
B)  limit 
C)  stop 
D)  round 
E)  discretionary 
A)  market 
B)  limit 
C)  stop 
D)  round 
E)  discretionary

When a corporation sells stock to the general public for the first time, it is referred to as a(n):

Dividends remain with the stock until:

A blue-chip stock is too speculative for most investors.

Matthew Boyd has saved $10,000 and wants to invest in common stock. Identify three investment methods he could use and briefly explain how each of those methods works.

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

Which type of preferred stock can be exchanged for common stock at the stockholder's option?

Book value per share is determined by:

Common stock dividends are paid out of profits and:

An investment theory based on the assumption that stock price movements are purely random is called the ____________ theory.

A proxy is a legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individual or individuals.

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

Assume the beta for the stock market in general is 1.0 and the beta for World-Wide Television Productions is 2.4. If the stock market increases in value by 10 percent, what is the expected increase in value for the World-Wide Productions stock?

Which one of the following statements is false?

A large-cap stock is a stock issued by a company that has a capitalization in excess of how much?

Mellon Manufacturing has after-tax income of $3 million. It also has 2 million shares of stock outstanding. What is the firm's earnings per share?

The record date is the date that the actual dividend payment is made to stockholders.

It is common for professional advisory services like Morningstar, Standard & Poor's, and Value Line to charge for more detailed financial information than provided on other Internet Websites.

Stocks issued by large corporations in mature industries often have high P-E ratios.

A request that a stock be bought or sold at a specified price is called a ____________ order.

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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Exam 14: Investing in Stocks

When a corporation sells stock to the general public for the first time, it is referred to as a(n):

Dividends remain with the stock until:

A blue-chip stock is too speculative for most investors.

Matthew Boyd has saved $10,000 and wants to invest in common stock. Identify three investment methods he could use and briefly explain how each of those methods works.

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

Which type of preferred stock can be exchanged for common stock at the stockholder's option?

Book value per share is determined by:

Common stock dividends are paid out of profits and:

An investment theory based on the assumption that stock price movements are purely random is called the ____________ theory.

A proxy is a legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individual or individuals.

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

Assume the beta for the stock market in general is 1.0 and the beta for World-Wide Television Productions is 2.4. If the stock market increases in value by 10 percent, what is the expected increase in value for the World-Wide Productions stock?

Which one of the following statements is false?

A large-cap stock is a stock issued by a company that has a capitalization in excess of how much?

Mellon Manufacturing has after-tax income of $3 million. It also has 2 million shares of stock outstanding. What is the firm's earnings per share?

The record date is the date that the actual dividend payment is made to stockholders.

It is common for professional advisory services like Morningstar, Standard & Poor's, and Value Line to charge for more detailed financial information than provided on other Internet Websites.

Stocks issued by large corporations in mature industries often have high P-E ratios.

A request that a stock be bought or sold at a specified price is called a ____________ order.

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters