Exam 14: Investing in Stocks

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?

Stocks issued by large corporations in mature industries often have high PE ratios.

Barker Creek Clothing has after-tax income of $12.8 million.It also has 32 million shares of stock outstanding.What is the firm's earnings per share?

The fundamental theory is based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company.

By using the Internet,it is possible to find market price quotations,but more detailed financial information about a corporation is unavailable to the average investor.

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 that pays higher than average dividends is called an income stock.

After a 2-for-1 stock split:

Jennifer Fritz is thinking about purchasing the stock of the Sunshine Corporation at the current market price.What type of order should she place?

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

Which one of the following is a true statement?

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.

Jo Bower purchased 150 shares of stock for $24 a share and sold it for $30 a share.The commissions required to buy and sell her stock totaled $120.Assuming she received no dividends during the time she owned the stock,what is her total return on this investment?

To safeguard investments,stock owners who believe the price of their stock will go down during an option period will purchase a:

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?

Ms.Hart's stock club uses numerous charts that plot past price movements and other stock ratios.Her club relies on _______ analysis to determine stock selections.

Stock dividends are determined by the:

A market order is a request that a stock be purchased or sold at the current market price.

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

Gaby Williams is thinking about buying some stock but wants some protection should the issuer miss paying a dividend payment.Which one of the following features would help provide this protection?