Question 1

Low price/earnings ratios indicate limited or low investor confidence.

Accepted Answer

A) True 
 B)False

Question 2

Capital appreciation of an investment is a form of current income.

Accepted Answer

A) True 
 B)False

Question 3

American Depositary Receipts are denominated in the currencies of the foreign countries where the corporations issuing these ADRs are registered.

Accepted Answer

A) True 
 B)False

Question 4

If you are looking for a guaranteed steady stream of income,you should invest in __________. ​

Accepted Answer

A) stocks 
B) bonds 
C) mortgages 
D) sinking fund 
A) stocks 
B) bonds 
C) mortgages 
D) sinking fund

Question 5

The approximate yield to maturity of a bond is greater than the stated rate of interest when:

Accepted Answer

A) the bond is purchased at face value. 
B) the bond is purchased at a discount. 
C) the bond is purchased at a premium. 
D) the market rates of interest decline. 
E) the market rates of interest are constant. 
A) the bond is purchased at face value. 
B) the bond is purchased at a discount. 
C) the bond is purchased at a premium. 
D) the market rates of interest decline. 
E) the market rates of interest are constant.

Question 6

A stock generally issued by companies expected to provide an uninterrupted stream of dividends and good,long-term growth prospects is called:

Accepted Answer

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

Question 7

The quoted price of a bond minus accrued interest is the __________. ​

Accepted Answer

A) clean price 
B) full price 
C) negotiated price 
D) par value 
A) clean price 
B) full price 
C) negotiated price 
D) par value

Question 8

Which of the following accounting measures indicates the amount of stockholder funds used to finance the firm?

Accepted Answer

A) Book value 
B) Actual rate of return 
C) Net profit margin 
D) Approximate yield 
E) Price/earnings ratio 
A) Book value 
B) Actual rate of return 
C) Net profit margin 
D) Approximate yield 
E) Price/earnings ratio

Question 9

When interest rates rise,bond prices will:

Accepted Answer

A) increase and then return to a steady price. 
B) rise. 
C) fall. 
D) vary unpredictably. 
E) not be affected. 
A) increase and then return to a steady price. 
B) rise. 
C) fall. 
D) vary unpredictably. 
E) not be affected.

Question 10

The commonly cited price for a bond in the financial press and on the Internet is usually its __________ bond price. ​

Accepted Answer

A) clean 
B) dirty 
C) premium 
D) discount 
A) clean 
B) dirty 
C) premium 
D) discount

Question 11

When evaluating a stock as a possible investment,one must consider:

Accepted Answer

A) the coupon rate. 
B) the expected interest income. 
C) the net profit margin. 
D) the maturity period. 
E) the sinking fund. 
A) the coupon rate. 
B) the expected interest income. 
C) the net profit margin. 
D) the maturity period. 
E) the sinking fund.

Question 12

Which of the following is true of American Depositary Receipts (ADRs)?

Accepted Answer

A) ADRs are traded only in foreign exchanges. 
B) ADRs are denominated in foreign currencies. 
C) ADRs represent a stated number of shares in a specific foreign company. 
D) The investors in ADRs receive annual interest amounts in dollars. 
E) The investors in ADRs receive dividends in foreign currencies. 
A) ADRs are traded only in foreign exchanges. 
B) ADRs are denominated in foreign currencies. 
C) ADRs represent a stated number of shares in a specific foreign company. 
D) The investors in ADRs receive annual interest amounts in dollars. 
E) The investors in ADRs receive dividends in foreign currencies.

Question 13

Bonds provide for investment returns primarily in the form of growth.

Accepted Answer

A) True 
 B)False

Question 14

One would prefer a stock with steadily increasing earnings per share and return on equity.

Accepted Answer

A) True 
 B)False

Question 15

__________ dividends are the most common form of dividends. ​

Accepted Answer

A) Cash 
B) Stock 
C) Convertible 
D) Reinvestment 
A) Cash 
B) Stock 
C) Convertible 
D) Reinvestment

Question 16

Which of the following types of bonds is unsecured?

Accepted Answer

A) Mortgage bonds 
B) Equipment trust certificates 
C) Debenture bonds 
D) Agency bonds 
E) Treasury bonds 
A) Mortgage bonds 
B) Equipment trust certificates 
C) Debenture bonds 
D) Agency bonds 
E) Treasury bonds

Question 17

Total investment return can be exactly calculated using the approximate expected yield method.

Accepted Answer

A) True 
 B)False

Question 18

Earnings per share indicates to the stockholders the amount of dividends earned.

Accepted Answer

A) True 
 B)False

Question 19

The easiest way to invest in foreign markets is through:

Accepted Answer

A) the stocks purchased directly from an overseas broker. 
B) the stocks purchased directly from a regular broker. 
C) the stocks purchased directly over the Internet. 
D) international mutual funds. 
E) the purchase of Eurobonds. 
A) the stocks purchased directly from an overseas broker. 
B) the stocks purchased directly from a regular broker. 
C) the stocks purchased directly over the Internet. 
D) international mutual funds. 
E) the purchase of Eurobonds.

Question 20

If an investor wants a higher level of return on an investment,he or she should expect __________. ​

Accepted Answer

A) a higher risk exposure 
B) a lower market risk exposure 
C) a lower tax liability 
D) a highly volatile security 
A) a higher risk exposure 
B) a lower market risk exposure 
C) a lower tax liability 
D) a highly volatile security

Low price/earnings ratios indicate limited or low investor confidence.

Capital appreciation of an investment is a form of current income.

American Depositary Receipts are denominated in the currencies of the foreign countries where the corporations issuing these ADRs are registered.

If you are looking for a guaranteed steady stream of income,you should invest in __________.

The approximate yield to maturity of a bond is greater than the stated rate of interest when:

A stock generally issued by companies expected to provide an uninterrupted stream of dividends and good,long-term growth prospects is called:

The quoted price of a bond minus accrued interest is the __________.

Which of the following accounting measures indicates the amount of stockholder funds used to finance the firm?

When interest rates rise,bond prices will:

The commonly cited price for a bond in the financial press and on the Internet is usually its __________ bond price.

When evaluating a stock as a possible investment,one must consider:

Which of the following is true of American Depositary Receipts (ADRs)?

Bonds provide for investment returns primarily in the form of growth.

One would prefer a stock with steadily increasing earnings per share and return on equity.

__________ dividends are the most common form of dividends.

Which of the following types of bonds is unsecured?

Total investment return can be exactly calculated using the approximate expected yield method.

Earnings per share indicates to the stockholders the amount of dividends earned.

The easiest way to invest in foreign markets is through:

If an investor wants a higher level of return on an investment,he or she should expect __________.

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

Low price/earnings ratios indicate limited or low investor confidence.

Capital appreciation of an investment is a form of current income.

American Depositary Receipts are denominated in the currencies of the foreign countries where the corporations issuing these ADRs are registered.

If you are looking for a guaranteed steady stream of income,you should invest in __________. ​

The approximate yield to maturity of a bond is greater than the stated rate of interest when:

A stock generally issued by companies expected to provide an uninterrupted stream of dividends and good,long-term growth prospects is called:

The quoted price of a bond minus accrued interest is the __________. ​

Which of the following accounting measures indicates the amount of stockholder funds used to finance the firm?

When interest rates rise,bond prices will:

The commonly cited price for a bond in the financial press and on the Internet is usually its __________ bond price. ​

When evaluating a stock as a possible investment,one must consider:

Which of the following is true of American Depositary Receipts (ADRs)?

Bonds provide for investment returns primarily in the form of growth.

One would prefer a stock with steadily increasing earnings per share and return on equity.

__________ dividends are the most common form of dividends. ​

Which of the following types of bonds is unsecured?

Total investment return can be exactly calculated using the approximate expected yield method.

Earnings per share indicates to the stockholders the amount of dividends earned.

The easiest way to invest in foreign markets is through:

If an investor wants a higher level of return on an investment,he or she should expect __________. ​

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

If you are looking for a guaranteed steady stream of income,you should invest in __________.

The quoted price of a bond minus accrued interest is the __________.

The commonly cited price for a bond in the financial press and on the Internet is usually its __________ bond price.

__________ dividends are the most common form of dividends.

If an investor wants a higher level of return on an investment,he or she should expect __________.