Question 1

A lower expected return means a higher risk will have to be accepted.

Accepted Answer

A) True 
 B)False

Question 2

Companies with a great deal of long-term debt are considered to have high _____ risk.

Accepted Answer

A) market 
B) event 
C) business 
D) financial 
E) liquidity 
A) market 
B) event 
C) business 
D) financial 
E) liquidity

Question 3

A stock's dividend yield is calculated as _____.

Accepted Answer

A) the annual dividend received per share divided by the book value per share of stock 
B) the book value per share of stock divided by the annual dividend received per share 
C) the annual dividend received per share divided by the market price per share of stock 
D) the market price per share of stock divided by the annual dividend received per share 
E) the earnings remaining after paying preferred dividends divided by the number of common shares outstanding 
A) the annual dividend received per share divided by the book value per share of stock 
B) the book value per share of stock divided by the annual dividend received per share 
C) the annual dividend received per share divided by the market price per share of stock 
D) the market price per share of stock divided by the annual dividend received per share 
E) the earnings remaining after paying preferred dividends divided by the number of common shares outstanding

Question 4

The relevant sale or invoice price of a bond to the buyer,which adds the accrued interest to the quoted price,is its:

Accepted Answer

A) par value. 
B) clean price. 
C) negotiated price. 
D) dirty price. 
E) discount price. 
A) par value. 
B) clean price. 
C) negotiated price. 
D) dirty price. 
E) discount price.

Question 5

One of the advantages of common stock investments is:

Accepted Answer

A) guaranteed dividend income. 
B) potential capital gains. 
C) steady interest income. 
D) fixed maturity periods. 
E) guaranteed payback of the principal amount. 
A) guaranteed dividend income. 
B) potential capital gains. 
C) steady interest income. 
D) fixed maturity periods. 
E) guaranteed payback of the principal amount.

Question 6

Stock dividends represent __________. ​

Accepted Answer

A) interest income 
B) non-sinking income 
C) non-taxable income 
D) speculative income 
A) interest income 
B) non-sinking income 
C) non-taxable income 
D) speculative income

Question 7

An investment that earns interest on interest is said to be earning a _____.

Accepted Answer

A) discounted rate of return 
B) fully compounded rate of return 
C) consolidated rate of return 
D) risk-free rate of return 
E) tax-free rate of return 
A) discounted rate of return 
B) fully compounded rate of return 
C) consolidated rate of return 
D) risk-free rate of return 
E) tax-free rate of return

Question 8

Positive aspects about bonds include:

Accepted Answer

A) high dividend receipts. 
B) less diversification properties. 
C) residual ownership. 
D) low risk as compared to equity. 
E) high returns as compared to equity. 
A) high dividend receipts. 
B) less diversification properties. 
C) residual ownership. 
D) low risk as compared to equity. 
E) high returns as compared to equity.

Question 9

The market price per share of Zinc Corporation is $150 and earnings per share is $20.What is the price/earnings ratio of Zinc Corporation?

Accepted Answer

A) 10.25 
B) 7.50 
C) 2.25 
D) 12.36 
E) 15.00 
A) 10.25 
B) 7.50 
C) 2.25 
D) 12.36 
E) 15.00

Question 10

__________ risk results from the behavior of investors in the securities markets that may cause security prices to fluctuate. ​

Accepted Answer

A) Market 
B) Business 
C) Purchasing power 
D) Event 
A) Market 
B) Business 
C) Purchasing power 
D) Event

Question 11

The return on a _____ is an appropriate measure of the risk-free rate of return.

Accepted Answer

A) long-term Treasury note 
B) certificate of deposit 
C) 90-day Treasury bill 
D) long-term corporate bond 
E) common stock 
A) long-term Treasury note 
B) certificate of deposit 
C) 90-day Treasury bill 
D) long-term corporate bond 
E) common stock

Question 12

Bonds are issued:

Accepted Answer

A) by corporations and state,local,and federal governments. 
B) only by state and local governments and partnership firms. 
C) only by corporations and partnership firms. 
D) by Moody's and Standard & Poor's. 
E) by the Securities Exchange Commission (SE
C) . 
A) by corporations and state,local,and federal governments. 
B) only by state and local governments and partnership firms. 
C) only by corporations and partnership firms. 
D) by Moody's and Standard & Poor's. 
E) by the Securities Exchange Commission (SE
C) .

Question 13

Changes in the general level of prices within an economy produce:

Accepted Answer

A) business risk. 
B) financial risk. 
C) market risk. 
D) purchasing power risk. 
E) liquidity risk. 
A) business risk. 
B) financial risk. 
C) market risk. 
D) purchasing power risk. 
E) liquidity risk.

Question 14

An example of event risk is:

Accepted Answer

A) inflation. 
B) a corporate takeover. 
C) a newspaper article about the economy. 
D) deflation. 
E) capital growth. 
A) inflation. 
B) a corporate takeover. 
C) a newspaper article about the economy. 
D) deflation. 
E) capital growth.

Question 15

The returns you expect from securities are income and growth.

Accepted Answer

A) True 
 B)False

Question 16

A bond is quoted as 6.5 percent coupon.The par value of the bond is $1,000,and the market value is $1,200.The bondholder would receive _____ interest per year.

Accepted Answer

A) $78 
B) $780 
C) $65 
D) $500 
E) $650 
A) $78 
B) $780 
C) $65 
D) $500 
E) $650

Question 17

Return on equity is calculated by:

Accepted Answer

A) subtracting liabilities from assets. 
B) adding the book value and the market price of a stock. 
C) dividing net income by shareholder's equity. 
D) multiplying assets by a selected number. 
E) deducting taxes from dividends. 
A) subtracting liabilities from assets. 
B) adding the book value and the market price of a stock. 
C) dividing net income by shareholder's equity. 
D) multiplying assets by a selected number. 
E) deducting taxes from dividends.

Question 18

Corporate ownership of an investor is evidenced by:

Accepted Answer

A) coupon payments received by him or her. 
B) common stocks held in a corporate. 
C) the investment in the bonds of the corporate. 
D) the receipt of capital gains by him or her. 
E) the holding of property rights of ownership. 
A) coupon payments received by him or her. 
B) common stocks held in a corporate. 
C) the investment in the bonds of the corporate. 
D) the receipt of capital gains by him or her. 
E) the holding of property rights of ownership.

Question 19

The callable feature of a bond protects the issuer when market interest rates are falling.

Accepted Answer

A) True 
 B)False

Question 20

When a bond is sold between coupon payment dates,the buyer pays the seller for the __________,which is the prorated share of the upcoming coupon payment. ​

Accepted Answer

A) accrued interest 
B) prepaid interest 
C) bond premium 
D) bond discount 
A) accrued interest 
B) prepaid interest 
C) bond premium 
D) bond discount

A lower expected return means a higher risk will have to be accepted.

Companies with a great deal of long-term debt are considered to have high _____ risk.

A stock's dividend yield is calculated as _____.

The relevant sale or invoice price of a bond to the buyer,which adds the accrued interest to the quoted price,is its:

One of the advantages of common stock investments is:

Stock dividends represent __________.

An investment that earns interest on interest is said to be earning a _____.

Positive aspects about bonds include:

The market price per share of Zinc Corporation is $150 and earnings per share is $20.What is the price/earnings ratio of Zinc Corporation?

__________ risk results from the behavior of investors in the securities markets that may cause security prices to fluctuate.

The return on a _____ is an appropriate measure of the risk-free rate of return.

Bonds are issued:

Changes in the general level of prices within an economy produce:

An example of event risk is:

The returns you expect from securities are income and growth.

A bond is quoted as 6.5 percent coupon.The par value of the bond is $1,000,and the market value is $1,200.The bondholder would receive _____ interest per year.

Return on equity is calculated by:

Corporate ownership of an investor is evidenced by:

The callable feature of a bond protects the issuer when market interest rates are falling.

When a bond is sold between coupon payment dates,the buyer pays the seller for the __________,which is the prorated share of the upcoming coupon payment.

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Mutual Funds, ETFS and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 12: Investing in Stocks and Bonds

A lower expected return means a higher risk will have to be accepted.

Companies with a great deal of long-term debt are considered to have high _____ risk.

A stock's dividend yield is calculated as _____.

The relevant sale or invoice price of a bond to the buyer,which adds the accrued interest to the quoted price,is its:

One of the advantages of common stock investments is:

Stock dividends represent __________. ​

An investment that earns interest on interest is said to be earning a _____.

Positive aspects about bonds include:

The market price per share of Zinc Corporation is $150 and earnings per share is $20.What is the price/earnings ratio of Zinc Corporation?

__________ risk results from the behavior of investors in the securities markets that may cause security prices to fluctuate. ​

The return on a _____ is an appropriate measure of the risk-free rate of return.

Bonds are issued:

Changes in the general level of prices within an economy produce:

An example of event risk is:

The returns you expect from securities are income and growth.

A bond is quoted as 6.5 percent coupon.The par value of the bond is $1,000,and the market value is $1,200.The bondholder would receive _____ interest per year.

Return on equity is calculated by:

Corporate ownership of an investor is evidenced by:

The callable feature of a bond protects the issuer when market interest rates are falling.

When a bond is sold between coupon payment dates,the buyer pays the seller for the __________,which is the prorated share of the upcoming coupon payment. ​

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Mutual Funds, ETFS and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Stock dividends represent __________.

__________ risk results from the behavior of investors in the securities markets that may cause security prices to fluctuate.

When a bond is sold between coupon payment dates,the buyer pays the seller for the __________,which is the prorated share of the upcoming coupon payment.