Question 1

An investor receives return from an investment due to:

Accepted Answer

A) recurring nature of a deposit. 
B) capital gains on sale of an investment. 
C) asset allocation among different asset classes. 
D) rebalancing by buying more equities. 
E) diversification among or within asset classes. 
A) recurring nature of a deposit. 
B) capital gains on sale of an investment. 
C) asset allocation among different asset classes. 
D) rebalancing by buying more equities. 
E) diversification among or within asset classes.

Question 2

_____ risk results from the behavior of investors in the securities market.

Accepted Answer

A) Business 
B) Financial 
C) Market 
D) Purchasing power 
E) Interest rate 
A) Business 
B) Financial 
C) Market 
D) Purchasing power 
E) Interest rate

Question 3

__________ is a measure of stock investors' confidence in a corporation. ​

Accepted Answer

A) Price/earnings ratio 
B) Coupon rate 
C) Debt safety ratio 
D) Maturity value 
A) Price/earnings ratio 
B) Coupon rate 
C) Debt safety ratio 
D) Maturity value

Question 4

Bondholders will receive interest payments after the stockholders receive dividends.

Accepted Answer

A) True 
 B)False

Question 5

The higher the tax bracket you are in,the more attractive the purchase of stocks becomes.

Accepted Answer

A) True 
 B)False

Question 6

The value of a stock at any time depends on its expected stream of future earnings.

Accepted Answer

A) True 
 B)False

Question 7

Stocks whose earnings have increased at an above average level over time are called:

Accepted Answer

A) cyclical stocks. 
B) growth stocks. 
C) income stocks. 
D) speculative stocks. 
E) defensive stocks. 
A) cyclical stocks. 
B) growth stocks. 
C) income stocks. 
D) speculative stocks. 
E) defensive stocks.

Question 8

Stock profitability is often measured by:

Accepted Answer

A) book value. 
B) return on equity. 
C) market value. 
D) net profit margin. 
E) beta. 
A) book value. 
B) return on equity. 
C) market value. 
D) net profit margin. 
E) beta.

Question 9

The business risk faced by an investor when investing in a company is related to:

Accepted Answer

A) changes in the price level in the economy. 
B) investor behavior in the market. 
C) the book value of firm's assets. 
D) the firm's ability to meet operating expenses in a timely manner. 
E) security price fluctuations. 
A) changes in the price level in the economy. 
B) investor behavior in the market. 
C) the book value of firm's assets. 
D) the firm's ability to meet operating expenses in a timely manner. 
E) security price fluctuations.

Question 10

Cash dividends on common stock are most often paid:

Accepted Answer

A) weekly. 
B) monthly. 
C) quarterly. 
D) semi-annually. 
E) annually. 
A) weekly. 
B) monthly. 
C) quarterly. 
D) semi-annually. 
E) annually.

Question 11

Which of the following investments have the highest liquidity risk?

Accepted Answer

A) Common stocks 
B) Corporate bonds 
C) Treasury bonds 
D) Land 
E) Mutual fund shares 
A) Common stocks 
B) Corporate bonds 
C) Treasury bonds 
D) Land 
E) Mutual fund shares

Question 12

A bond selling below par value is selling at:

Accepted Answer

A) a discount. 
B) its coupon value. 
C) a premium. 
D) its maturity value. 
E) the highest effective yield. 
A) a discount. 
B) its coupon value. 
C) a premium. 
D) its maturity value. 
E) the highest effective yield.

Question 13

An investment is acceptable if the expected rate of return is greater than the required rate of return.

Accepted Answer

A) True 
 B)False

Question 14

Stocks can be used aggressively by investors seeking current income,and bonds can be used aggressively by investors seeking capital gains.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following types of risks affects owners of fixed income securities more than owners of equity securities?

Accepted Answer

A) Business risk 
B) Event risk 
C) Market risk 
D) Interest rate risk 
E) Purchasing power risk 
A) Business risk 
B) Event risk 
C) Market risk 
D) Interest rate risk 
E) Purchasing power risk

Question 16

The advantages of a dividend reinvestment plan (DRP)may include:

Accepted Answer

A) stock sold at a discount. 
B) guaranteed rate of return. 
C) tax advantages. 
D) convertibility option. 
E) repayment of the principal. 
A) stock sold at a discount. 
B) guaranteed rate of return. 
C) tax advantages. 
D) convertibility option. 
E) repayment of the principal.

Question 17

Past returns on an investment are only an indication of future returns.

Accepted Answer

A) True 
 B)False

Question 18

The higher the net profit margin of a company,the more money the company earns.

Accepted Answer

A) True 
 B)False

Question 19

The Smith family owns 200 shares of Elta stock.The company declared a 5 percent stock dividend.The Smiths now own:

Accepted Answer

A) 200 shares. 
B) 205 shares. 
C) 210 shares. 
D) 420 shares. 
E) 410 shares. 
A) 200 shares. 
B) 205 shares. 
C) 210 shares. 
D) 420 shares. 
E) 410 shares.

Question 20

Changes in the value of securities due to social,political,or economic factors are referred to as market risk.

Accepted Answer

A) True 
 B)False

An investor receives return from an investment due to:

_____ risk results from the behavior of investors in the securities market.

__________ is a measure of stock investors' confidence in a corporation.

Bondholders will receive interest payments after the stockholders receive dividends.

The higher the tax bracket you are in,the more attractive the purchase of stocks becomes.

The value of a stock at any time depends on its expected stream of future earnings.

Stocks whose earnings have increased at an above average level over time are called:

Stock profitability is often measured by:

The business risk faced by an investor when investing in a company is related to:

Cash dividends on common stock are most often paid:

Which of the following investments have the highest liquidity risk?

A bond selling below par value is selling at:

An investment is acceptable if the expected rate of return is greater than the required rate of return.

Stocks can be used aggressively by investors seeking current income,and bonds can be used aggressively by investors seeking capital gains.

Which of the following types of risks affects owners of fixed income securities more than owners of equity securities?

The advantages of a dividend reinvestment plan (DRP)may include:

Past returns on an investment are only an indication of future returns.

The higher the net profit margin of a company,the more money the company earns.

The Smith family owns 200 shares of Elta stock.The company declared a 5 percent stock dividend.The Smiths now own:

Changes in the value of securities due to social,political,or economic factors are referred to as market risk.

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

An investor receives return from an investment due to:

_____ risk results from the behavior of investors in the securities market.

__________ is a measure of stock investors' confidence in a corporation. ​

Bondholders will receive interest payments after the stockholders receive dividends.

The higher the tax bracket you are in,the more attractive the purchase of stocks becomes.

The value of a stock at any time depends on its expected stream of future earnings.

Stocks whose earnings have increased at an above average level over time are called:

Stock profitability is often measured by:

The business risk faced by an investor when investing in a company is related to:

Cash dividends on common stock are most often paid:

Which of the following investments have the highest liquidity risk?

A bond selling below par value is selling at:

An investment is acceptable if the expected rate of return is greater than the required rate of return.

Stocks can be used aggressively by investors seeking current income,and bonds can be used aggressively by investors seeking capital gains.

Which of the following types of risks affects owners of fixed income securities more than owners of equity securities?

The advantages of a dividend reinvestment plan (DRP)may include:

Past returns on an investment are only an indication of future returns.

The higher the net profit margin of a company,the more money the company earns.

The Smith family owns 200 shares of Elta stock.The company declared a 5 percent stock dividend.The Smiths now own:

Changes in the value of securities due to social,political,or economic factors are referred to as market risk.

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

__________ is a measure of stock investors' confidence in a corporation.