Question 1

Which one of the following statements is true?

Accepted Answer

A) When an investor buys stocks and assumes they will increase in value, he or she is using a procedure called selling short. 
B) Selling short is selling stock that has been borrowed from a brokerage firm. 
C) When you sell short, you buy today, knowing 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 makes money. 
E) To make money in a short transaction, you must hold on the stock for at least one year. 
A) When an investor buys stocks and assumes they will increase in value, he or she is using a procedure called selling short. 
B) Selling short is selling stock that has been borrowed from a brokerage firm. 
C) When you sell short, you buy today, knowing 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 makes money. 
E) To make money in a short transaction, you must hold on the stock for at least one year.

Question 2

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

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 3

Acme Widget,Inc.has one million shares of common stock outstanding at a price per share of $85.The company earned $5 million after taxes.The annual dividend is $3.50 per share.The company has assets of $125,000,000 and liabilities of $25,000,000.What is the dividend yield rounded to nearest hundredth of a percent?

Accepted Answer

A) 3.50 percent 
B) 1.43 percent 
C) 5.00 percent 
D) 4.12 percent 
E) 3.44 percent 
A) 3.50 percent 
B) 1.43 percent 
C) 5.00 percent 
D) 4.12 percent 
E) 3.44 percent

Question 4

When a stock splits two-for-one,you should expect the price per share to:

Accepted Answer

A) decrease to half its pre-split price. 
B) decrease in value by 75 percent or more. 
C) remain unchanged. 
D) increase to more than twice its pre-split price. 
E) increase to twice its pre-split price. 
A) decrease to half its pre-split price. 
B) decrease in value by 75 percent or more. 
C) remain unchanged. 
D) increase to more than twice its pre-split price. 
E) increase to twice its pre-split price.

Question 5

A market in which an investor purchases financial securities from the issuer of those securities using an investment bank or other representative is called the ____________ market.

Accepted Answer

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

Question 6

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 factors to examine when evaluating a stock. 
C) Higher earnings generally equate to higher stock value. 
D) The price for a share of stock is determined by what another investor is willing to pay for it. 
E) It is impossible to determine corporate earnings by using investment research and financial calculations. 
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 factors to examine when evaluating a stock. 
C) Higher earnings generally equate to higher stock value. 
D) The price for a share of stock is determined by what another investor is willing to pay for it. 
E) It is impossible to determine corporate earnings by using investment research and financial calculations.

Question 7

James Brewer purchased 100 shares of stock for $72 a share.James also paid a $55 commission.What was the total purchase price for this transaction?

Accepted Answer

A) $55.00 
B) $127.00 
C) $7,237.50 
D) $7,255.00 
E) $7,347.50 
A) $55.00 
B) $127.00 
C) $7,237.50 
D) $7,255.00 
E) $7,347.50

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following is a true statement regarding account executives?

Accepted Answer

A) They are generally not liable for client losses that result from their recommendations. 
B) It is wise to allow an account executive to make investment decisions without the client's approval. 
C) An account executive cannot buy and sell securities for clients and help them develop your investment program. 
D) An account executive is not licensed to buy or sell securities for clients. 
E) The arbitration clause allows clients to sue the brokerage firm that an account executive represents. 
A) They are generally not liable for client losses that result from their recommendations. 
B) It is wise to allow an account executive to make investment decisions without the client's approval. 
C) An account executive cannot buy and sell securities for clients and help them develop your investment program. 
D) An account executive is not licensed to buy or sell securities for clients. 
E) The arbitration clause allows clients to sue the brokerage firm that an account executive represents.

Question 10

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

Accepted Answer

A) the same as 
B) lower than 
C) higher than 
D) unrelated to 
E) safer 
A) the same as 
B) lower than 
C) higher than 
D) unrelated to 
E) safer

Question 11

Jeff Goldblum has just purchased a security which has no maturity date and no promised payments.He can recoup his investment by either selling the security to another individual or to the issuer,if the issuer ever makes an offer to buy it.What type of security did Jeff purchase?

Accepted Answer

A) Stock option 
B) Corporate bond 
C) Government bond 
D) Dividend 
E) Common stock 
A) Stock option 
B) Corporate bond 
C) Government bond 
D) Dividend 
E) Common stock

Question 12

A stock split is a procedure in which a stockholder's common stock is exchanged for preferred stock.

Accepted Answer

A) True 
 B)False

Question 13

A low market-to-book ratio could indicate that a stock is undervalued.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Which one of the following is a true statement?

Accepted Answer

A) The over-the-counter market is a network of dealers who buy and sell the stocks of corporations that are not listed on a securities exchange. 
B) Account executives specialize in a particular stock. 
C) OTC trading is for investors who want to buy or sell stocks in stores. 
D) Specialists are not members of the NYSE. 
E) Most NYSE members represent brokerage firms that do not charge commissions on security trades. 
A) The over-the-counter market is a network of dealers who buy and sell the stocks of corporations that are not listed on a securities exchange. 
B) Account executives specialize in a particular stock. 
C) OTC trading is for investors who want to buy or sell stocks in stores. 
D) Specialists are not members of the NYSE. 
E) Most NYSE members represent brokerage firms that do not charge commissions on security trades.

Question 16

Many investors and analysts believe that a corporation's ability or inability to generate _____ in the future may be one of the most significant factors that account for an increase or decrease in the value of a stock.

Accepted Answer

A) stockholder support 
B) dividends 
C) earnings 
D) new business locations 
E) new business ideas 
A) stockholder support 
B) dividends 
C) earnings 
D) new business locations 
E) new business ideas

Question 17

Why do corporations issue common stock? Why do investors buy that stock?

Accepted Answer

Corporations issue common stock to finan

Question 18

A defensive stock is a stock that typically sells for less than $1.

Accepted Answer

A) True 
 B)False

Question 19

Equity financing is a preferred choice to provide 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 have to buy back the shares. 
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 have to buy back the shares.

Question 20

Most speculators purchase stock and hold onto it for a number of years.

Accepted Answer

A) True 
 B)False

Which one of the following statements is true?

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

When a stock splits two-for-one,you should expect the price per share to:

A market in which an investor purchases financial securities from the issuer of those securities using an investment bank or other representative is called the ____________ market.

Which one of the following statements is false?

James Brewer purchased 100 shares of stock for $72 a share.James also paid a $55 commission.What was the total purchase price for this transaction?

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

Which one of the following is a true statement regarding account executives?

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

Jeff Goldblum has just purchased a security which has no maturity date and no promised payments.He can recoup his investment by either selling the security to another individual or to the issuer,if the issuer ever makes an offer to buy it.What type of security did Jeff purchase?

A stock split is a procedure in which a stockholder's common stock is exchanged for preferred stock.

A low market-to-book ratio could indicate that a stock is undervalued.

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.

Which one of the following is a true statement?

Many investors and analysts believe that a corporation's ability or inability to generate _____ in the future may be one of the most significant factors that account for an increase or decrease in the value of a stock.

Why do corporations issue common stock? Why do investors buy that stock?

A defensive stock is a stock that typically sells for less than $1.

Equity financing is a preferred choice to provide financing for a corporation because:

Most speculators purchase stock and hold onto it for a number of years.

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 Stock

Which one of the following statements is true?

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

When a stock splits two-for-one,you should expect the price per share to:

A market in which an investor purchases financial securities from the issuer of those securities using an investment bank or other representative is called the ____________ market.

Which one of the following statements is false?

James Brewer purchased 100 shares of stock for $72 a share.James also paid a $55 commission.What was the total purchase price for this transaction?

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

Which one of the following is a true statement regarding account executives?

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

Jeff Goldblum has just purchased a security which has no maturity date and no promised payments.He can recoup his investment by either selling the security to another individual or to the issuer,if the issuer ever makes an offer to buy it.What type of security did Jeff purchase?

A stock split is a procedure in which a stockholder's common stock is exchanged for preferred stock.

A low market-to-book ratio could indicate that a stock is undervalued.

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.

Which one of the following is a true statement?

Many investors and analysts believe that a corporation's ability or inability to generate _____ in the future may be one of the most significant factors that account for an increase or decrease in the value of a stock.

Why do corporations issue common stock? Why do investors buy that stock?

A defensive stock is a stock that typically sells for less than $1.

Equity financing is a preferred choice to provide financing for a corporation because:

Most speculators purchase stock and hold onto it for a number of years.

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