Question 1

Stocks are guaranteed to have large returns.

Accepted Answer

A) True 
 B)False

Question 2

Terry wants to begin investing and needs some guidance because he is uncomfortable making investment decisions.He should use a(n)

Accepted Answer

A)  Discount broker. 
B)  Full-service broker. 
C)  Market maker. 
D)  Online broker. 
E)  None of these is correct. 
A)  Discount broker. 
B)  Full-service broker. 
C)  Market maker. 
D)  Online broker. 
E)  None of these is correct.

Question 3

Ethan wants to purchase some stock for the first time.Which of the following is correct?

Accepted Answer

A)  His account executive should be encouraged to churn Ethan's account to maximize his return. 
B)  He should use an online broker to get specific advice about purchasing stock. 
C)  His purchase price will exactly equal the number of shares he purchases times the price per share and is known in advance. 
D)  If he uses a market order, he can lock in the price at which he wants to buy the stock. 
E)  His commission should be lower at an online broker than at a full-service broker. 
A)  His account executive should be encouraged to churn Ethan's account to maximize his return. 
B)  He should use an online broker to get specific advice about purchasing stock. 
C)  His purchase price will exactly equal the number of shares he purchases times the price per share and is known in advance. 
D)  If he uses a market order, he can lock in the price at which he wants to buy the stock. 
E)  His commission should be lower at an online broker than at a full-service broker.

Question 4

When analyzing a price-earnings ratio,

Accepted Answer

A)  A higher price-earnings ratio indicates pessimism because the price is too high compared to the earnings. 
B)  The higher the price-earnings ratio, the more investors are paying for earnings. 
C)  A low ratio indicates that investors expect higher earnings in the future. 
D)  Price-earnings ratios are helpful when comparing two companies in the same industry, but not to the market in general. 
E)  The price-earnings ratio alone provides enough information to allow an investor to decide whether to invest in a particular stock. 
A)  A higher price-earnings ratio indicates pessimism because the price is too high compared to the earnings. 
B)  The higher the price-earnings ratio, the more investors are paying for earnings. 
C)  A low ratio indicates that investors expect higher earnings in the future. 
D)  Price-earnings ratios are helpful when comparing two companies in the same industry, but not to the market in general. 
E)  The price-earnings ratio alone provides enough information to allow an investor to decide whether to invest in a particular stock.

Question 5

Annual reports

Accepted Answer

A)  Are available from a company for a fee. 
B)  Are available only to current stockholders. 
C)  Include the same information as a prospectus. 
D)  Must be sent to all stockholders on an annual basis. 
E)  Include estimated financial data only. 
A)  Are available from a company for a fee. 
B)  Are available only to current stockholders. 
C)  Include the same information as a prospectus. 
D)  Must be sent to all stockholders on an annual basis. 
E)  Include estimated financial data only.

Question 6

Mallory wants to purchase stock at the current market price.She should use a

Accepted Answer

A)  Current sale order. 
B)  Limit order. 
C)  Market order. 
D)  Stop order. 
E)  Stop-loss order. 
A)  Current sale order. 
B)  Limit order. 
C)  Market order. 
D)  Stop order. 
E)  Stop-loss order.

Question 7

Jake wanted to buy and sell various stocks on the NYSE.He was using one of the largest _______________ in the world.

Accepted Answer

A)  initial public offerings 
B)  investment banks 
C)  primary markets 
D)  secondary markets 
E)  securities exchanges 
A)  initial public offerings 
B)  investment banks 
C)  primary markets 
D)  secondary markets 
E)  securities exchanges

Question 8

Discuss full-service,discount,and online brokers.

Accepted Answer

A full-service broker is appropriate for

Question 9

If you bought a stock on July 1,2010,and sold it on July 15,2010,you may be a(n)

Accepted Answer

A)  Speculator. 
B)  Trader. 
C)  Investor. 
D)  Two of these are correct. 
E)  All of these are correct. 
A)  Speculator. 
B)  Trader. 
C)  Investor. 
D)  Two of these are correct. 
E)  All of these are correct.

Question 10

Most securities that are considered "over-the-counter" are traded through the NYSE.

Accepted Answer

A) True 
 B)False

Question 11

MNOP Inc.declared a $1.00 dividend with a record date of Thursday,September 15,and a payment date of Thursday,October 20.Cheri wants to purchase stock and receive the dividend.What is the latest date that she needs to have purchased the stock in order to receive the dividend?

Accepted Answer

A)  September 12 
B)  September 13 
C)  September 15 
D)  September 19 
E)  October 18 
A)  September 12 
B)  September 13 
C)  September 15 
D)  September 19 
E)  October 18

Question 12

This calculation uses the annual amount of money paid to investors from the company.

Accepted Answer

A)  Book value 
B)  Dividend yield 
C)  Earnings per share 
D)  Market value 
E)  Price-earnings ratio 
A)  Book value 
B)  Dividend yield 
C)  Earnings per share 
D)  Market value 
E)  Price-earnings ratio

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Timothy has $100 automatically invested in a stock each month.This way,he doesn't buy high and sell low.He is using a

Accepted Answer

A)  Buy-and-hold technique. 
B)  Direct investment plan. 
C)  Direct reinvestment plan. 
D)  Dollar cost averaging technique. 
E)  Margin technique. 
A)  Buy-and-hold technique. 
B)  Direct investment plan. 
C)  Direct reinvestment plan. 
D)  Dollar cost averaging technique. 
E)  Margin technique.

Question 15

Which of the following is correct?

Accepted Answer

A)  Earnings are a minor factor in determining the value of a stock. 
B)  Corporate earnings are reported in the proxy statement. 
C)  Earnings per share uses the price of the stock in the calculation. 
D)  EPS is a key factor that serious investors use to evaluate stock investments. 
E)  The price/earnings ratio is the price of a share of stock divided by the corporation's earnings per share of stock. 
A)  Earnings are a minor factor in determining the value of a stock. 
B)  Corporate earnings are reported in the proxy statement. 
C)  Earnings per share uses the price of the stock in the calculation. 
D)  EPS is a key factor that serious investors use to evaluate stock investments. 
E)  The price/earnings ratio is the price of a share of stock divided by the corporation's earnings per share of stock.

Question 16

Glen bought XYZ stock on November 8,2009,at a price of $39.20 and then sold it on March 19,2011,at $11.20.Glen can be classified as a speculator.

Accepted Answer

A) True 
 B)False

Question 17

Why might you want to invest in common stocks?

Accepted Answer

You might want to invest in common stock

Question 18

Gregory bought 500 shares of stock at a price of $60 per share.He later sold his stock at a price of $56.What was his total return on his investment?

Accepted Answer

A)  $2,000 loss 
B)  $60 loss 
C)  $4 gain 
D)  $2,000 gain 
E)  $26,500 gain 
A)  $2,000 loss 
B)  $60 loss 
C)  $4 gain 
D)  $2,000 gain 
E)  $26,500 gain

Question 19

Total return equals

Accepted Answer

A)  Dividend yield. 
B)  Annual dividends in dollars plus capital gains. 
C)  Capital gains. 
D)  Annual dividends in dollars less capital gains. 
E)  Capital gains less annual dividends in dollars. 
A)  Dividend yield. 
B)  Annual dividends in dollars plus capital gains. 
C)  Capital gains. 
D)  Annual dividends in dollars less capital gains. 
E)  Capital gains less annual dividends in dollars.

Question 20

Which of the following is not correct?

Accepted Answer

A)  You pay interest on money borrowed to purchase stock on margin. 
B)  Selling short is selling stock borrowed from a brokerage firm. 
C)  A call option is the right, but not the obligation, to purchase a stock at a specified price by a given date. 
D)  A brokerage firm receives double its commission when stock is bought and sold when the investor is selling short. 
E)  If the stock price decreases and you purchased that stock on margin, you may receive a margin call. 
A)  You pay interest on money borrowed to purchase stock on margin. 
B)  Selling short is selling stock borrowed from a brokerage firm. 
C)  A call option is the right, but not the obligation, to purchase a stock at a specified price by a given date. 
D)  A brokerage firm receives double its commission when stock is bought and sold when the investor is selling short. 
E)  If the stock price decreases and you purchased that stock on margin, you may receive a margin call.

Stocks are guaranteed to have large returns.

Terry wants to begin investing and needs some guidance because he is uncomfortable making investment decisions.He should use a(n)

Ethan wants to purchase some stock for the first time.Which of the following is correct?

When analyzing a price-earnings ratio,

Annual reports

Mallory wants to purchase stock at the current market price.She should use a

Jake wanted to buy and sell various stocks on the NYSE.He was using one of the largest _______________ in the world.

Discuss full-service,discount,and online brokers.

If you bought a stock on July 1,2010,and sold it on July 15,2010,you may be a(n)

Most securities that are considered "over-the-counter" are traded through the NYSE.

MNOP Inc.declared a $1.00 dividend with a record date of Thursday,September 15,and a payment date of Thursday,October 20.Cheri wants to purchase stock and receive the dividend.What is the latest date that she needs to have purchased the stock in order to receive the dividend?

This calculation uses the annual amount of money paid to investors from the company.

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

Timothy has $100 automatically invested in a stock each month.This way,he doesn't buy high and sell low.He is using a

Which of the following is correct?

Glen bought XYZ stock on November 8,2009,at a price of $39.20 and then sold it on March 19,2011,at $11.20.Glen can be classified as a speculator.

Why might you want to invest in common stocks?

Gregory bought 500 shares of stock at a price of $60 per share.He later sold his stock at a price of $56.What was his total return on his investment?

Total return equals

Which of the following is not correct?

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Savings Plans and Payment Account

Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Income Insurance

Financial Planning With Life Insurance

Investing Basics and Evaluating Bonds

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters

Exam 12: Investing in Stocks

Stocks are guaranteed to have large returns.

Terry wants to begin investing and needs some guidance because he is uncomfortable making investment decisions.He should use a(n)

Ethan wants to purchase some stock for the first time.Which of the following is correct?

When analyzing a price-earnings ratio,

Annual reports

Mallory wants to purchase stock at the current market price.She should use a

Jake wanted to buy and sell various stocks on the NYSE.He was using one of the largest _______________ in the world.

Discuss full-service,discount,and online brokers.

If you bought a stock on July 1,2010,and sold it on July 15,2010,you may be a(n)

Most securities that are considered "over-the-counter" are traded through the NYSE.

MNOP Inc.declared a $1.00 dividend with a record date of Thursday,September 15,and a payment date of Thursday,October 20.Cheri wants to purchase stock and receive the dividend.What is the latest date that she needs to have purchased the stock in order to receive the dividend?

This calculation uses the annual amount of money paid to investors from the company.

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

Timothy has $100 automatically invested in a stock each month.This way,he doesn't buy high and sell low.He is using a

Which of the following is correct?

Glen bought XYZ stock on November 8,2009,at a price of $39.20 and then sold it on March 19,2011,at $11.20.Glen can be classified as a speculator.

Why might you want to invest in common stocks?

Gregory bought 500 shares of stock at a price of $60 per share.He later sold his stock at a price of $56.What was his total return on his investment?

Total return equals

Which of the following is not correct?

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Savings Plans and Payment Account

Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Income Insurance

Financial Planning With Life Insurance

Investing Basics and Evaluating Bonds

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters