Question 1

The NYSE is an example of a(n)

Accepted Answer

A)  Initial public offering. 
B)  Investment bank. 
C)  Primary market. 
D)  Secondary market. 
E)  Securities exchange. 
A)  Initial public offering. 
B)  Investment bank. 
C)  Primary market. 
D)  Secondary market. 
E)  Securities exchange.

Question 2

A stock that typically sells for less than $1 per share is called a(n)_______ stock.

Accepted Answer

A)  blue chip 
B)  income 
C)  micro cap 
D)  midcap 
E)  penny 
A)  blue chip 
B)  income 
C)  micro cap 
D)  midcap 
E)  penny

Question 3

Faye sometimes borrows money from her broker to buy her stock.She is buying

Accepted Answer

A)  A call option. 
B)  A direct investment. 
C)  On margin. 
D)  A put option. 
E)  A short sale. 
A)  A call option. 
B)  A direct investment. 
C)  On margin. 
D)  A put option. 
E)  A short sale.

Question 4

Earnings per share equals the corporation's after-tax earnings divided by the number of outstanding shares of a firm's common stock.

Accepted Answer

A) True 
 B)False

Question 5

An investor may receive a margin call when selling stock short.

Accepted Answer

A) True 
 B)False

Question 6

Rebecca owns stock that pays a dividend.She does not want the cash now; instead she would prefer to have more shares of stock.She should use a

Accepted Answer

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

Question 7

Patrick sold his GE shares using his online broker.One can say that he sold them on the

Accepted Answer

A)  Initial public offering. 
B)  Investment bank. 
C)  Primary market. 
D)  Secondary market. 
E)  Securities exchange. 
A)  Initial public offering. 
B)  Investment bank. 
C)  Primary market. 
D)  Secondary market. 
E)  Securities exchange.

Question 8

Which of the following is a profitability ratio that uses the number of outstanding shares in the calculation?

Accepted Answer

A)  Capital gain 
B)  Earnings per share 
C)  Price per share 
D)  Net income 
E)  Dividend yield 
A)  Capital gain 
B)  Earnings per share 
C)  Price per share 
D)  Net income 
E)  Dividend yield

Question 9

What are three calculations that can be used to evaluate the profitability of a corporation?

Accepted Answer

Possible answers include these:
• Earnin

Question 10

The opportunity,but not the obligation,to buy a security within a specified period of time at a guaranteed price is

Accepted Answer

A)  A call option. 
B)  Direct investing. 
C)  Buying on margin. 
D)  A put option. 
E)  A short sale. 
A)  A call option. 
B)  Direct investing. 
C)  Buying on margin. 
D)  A put option. 
E)  A short sale.

Question 11

Corporate earnings are reported in the firm's annual report.

Accepted Answer

A) True 
 B)False

Question 12

Typically the commission paid for a stock sale will be lower with a full-service broker than for an online brokerage firm.

Accepted Answer

A) True 
 B)False

Question 13

Tammy feels quite comfortable trading her own stocks using a computer.She should use a(n)

Accepted Answer

A)  Discount broker. 
B)  Full-service broker. 
C)  Market maker. 
D)  Online broker. 
E)  All of these are correct. 
A)  Discount broker. 
B)  Full-service broker. 
C)  Market maker. 
D)  Online broker. 
E)  All of these are correct.

Question 14

Given the information shown here for NMOP Inc.,calculate the dividend yield.
• Annual dividend = $4.00
• Number of shares outstanding = 40,000
• Current market value per share = $40.00
• Book value per share = $8.00

Accepted Answer

A)  10% 
B)  15% 
C)  20% 
D)  25% 
E)  40% 
A)  10% 
B)  15% 
C)  20% 
D)  25% 
E)  40%

Question 15

Stephen wanted to become one of the owners of GHI Corp.when it finally was available to the general public.He participated in the

Accepted Answer

A)  Initial public offering. 
B)  Investment bank. 
C)  Primary market. 
D)  Secondary market. 
E)  Securities exchange. 
A)  Initial public offering. 
B)  Investment bank. 
C)  Primary market. 
D)  Secondary market. 
E)  Securities exchange.

The NYSE is an example of a(n)

A stock that typically sells for less than $1 per share is called a(n)_______ stock.

Faye sometimes borrows money from her broker to buy her stock.She is buying

Earnings per share equals the corporation's after-tax earnings divided by the number of outstanding shares of a firm's common stock.

An investor may receive a margin call when selling stock short.

Rebecca owns stock that pays a dividend.She does not want the cash now; instead she would prefer to have more shares of stock.She should use a

Patrick sold his GE shares using his online broker.One can say that he sold them on the

Which of the following is a profitability ratio that uses the number of outstanding shares in the calculation?

What are three calculations that can be used to evaluate the profitability of a corporation?

The opportunity,but not the obligation,to buy a security within a specified period of time at a guaranteed price is

Corporate earnings are reported in the firm's annual report.

Typically the commission paid for a stock sale will be lower with a full-service broker than for an online brokerage firm.

Tammy feels quite comfortable trading her own stocks using a computer.She should use a(n)

Given the information shown here for NMOP Inc.,calculate the dividend yield. • Annual dividend = $4.00 • Number of shares outstanding = 40,000 • Current market value per share = $40.00 • Book value per share = $8.00

Stephen wanted to become one of the owners of GHI Corp.when it finally was available to the general public.He participated in the

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

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Exam 12: Investing in Stocks

The NYSE is an example of a(n)

A stock that typically sells for less than $1 per share is called a(n)_______ stock.

Faye sometimes borrows money from her broker to buy her stock.She is buying

Earnings per share equals the corporation's after-tax earnings divided by the number of outstanding shares of a firm's common stock.

An investor may receive a margin call when selling stock short.

Rebecca owns stock that pays a dividend.She does not want the cash now; instead she would prefer to have more shares of stock.She should use a

Patrick sold his GE shares using his online broker.One can say that he sold them on the

Which of the following is a profitability ratio that uses the number of outstanding shares in the calculation?

What are three calculations that can be used to evaluate the profitability of a corporation?

The opportunity,but not the obligation,to buy a security within a specified period of time at a guaranteed price is

Corporate earnings are reported in the firm's annual report.

Typically the commission paid for a stock sale will be lower with a full-service broker than for an online brokerage firm.

Tammy feels quite comfortable trading her own stocks using a computer.She should use a(n)

Given the information shown here for NMOP Inc.,calculate the dividend yield. • Annual dividend = $4.00 • Number of shares outstanding = 40,000 • Current market value per share = $40.00 • Book value per share = $8.00

Stephen wanted to become one of the owners of GHI Corp.when it finally was available to the general public.He participated in the

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

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