Exam 11: Investing in Stocks

Assume that you purchased 50 shares of Home Depot stock for $35 a share, that you received an annual dividend of $0.30 a share, and that you sold your Home Depot stock for $40 a share at the end of one year. What is the total return for your investment? (Ignore commission amounts for this question.)

The type of stock that may earn more than the stated dividend if the firm has a good year is ____________ stock.

Capital gains yield is the stock's appreciation in value divided by its end-of-year stock price.

Anne owns 300 shares of Lily Industries. Suppose that for the last calendar quarter, Lily Industries paid $.30 a share. What is the total amount she received in her dividend cheque for this quarter?

The beta is an index that compares the risk associated with a specific stock issue with the risk of the stock market in general.

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called a

The price-earnings ratio is calculated by dividing the earnings per share of a stock by its fair market value.

If the board of directors approves a two for one stock split, an investor who owns 200 shares before the split owns ____________ shares after the split.

Which of the following statements is not true?

The annual shareholder return is the beginning-of-year stock price divided by the stocks annual dividend.

Convertible preferred stock may be exchanged, at the corporation's option, for a specified number of shares of common stock.

A small cap stock is a stock that typically sells for less than 1$ per share.

Which of the following statements is not true?

Equity financing is a popular choice to provide long-term financing for a corporation because

A large-cap stock is a stock issued by a company that has capitalization of $150 million or less.

A cyclical stock is a stock that follows the business cycle of advances and declines in the economy.

The Cumulative feature of a preferred stock is that a corporation may exchange, at its option, for a specified amount of money.

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

Becky Harie bought GBX Corporation stock for $24.38 a share. After six months, she received $2.25 in dividends and the market value the stock was $25.01 a share. If Becky decided to sell the stock at this time, what would be her shareholder return?

Oil-Slick Shipping stock was priced at $70 at the beginning of the year. Over the year the corporation paid a dividend of $3.25 and its stock price at year-end was $65. What is the trailing dividend yield?