Question 1

Doug Baker bought Toronto Dominion stocks for $50 a share one year ago. He sold the stock a year later for $55.50 a share. What was John's capital gains yield?

Accepted Answer

A)  3 percent 
B)  3.50 percent 
C)  9.9 percent 
D)  11 percent 
E)  111 percent 
A)  3 percent 
B)  3.50 percent 
C)  9.9 percent 
D)  11 percent 
E)  111 percent

Question 2

Which of the following statements is not true?

Accepted Answer

A)  Corporations are required by law to have two stockholder meetings each year. 
B)  Stockholders must approve any amendment of the corporate charter. 
C)  Stockholders must approve the sale of certain corporate assets. 
D)  Corporations are required by law to distribute annual reports. 
E)  Stockholders may vote in person or by proxy. 
A)  Corporations are required by law to have two stockholder meetings each year. 
B)  Stockholders must approve any amendment of the corporate charter. 
C)  Stockholders must approve the sale of certain corporate assets. 
D)  Corporations are required by law to distribute annual reports. 
E)  Stockholders may vote in person or by proxy.

Question 3

If an investor owns participating preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

Accepted Answer

A) True 
 B)False

Question 4

A securities exchange is a marketplace where member brokers who are representing investors meet to buy and sell securities.

Accepted Answer

A) True 
 B)False

Question 5

A stock that follows the business cycle of advances and declines in the economy is called a(n) ____________ stock.

Accepted Answer

A)  defensive 
B)  cyclical 
C)  growth 
D)  income 
E)  blue-chip 
A)  defensive 
B)  cyclical 
C)  growth 
D)  income 
E)  blue-chip

Question 6

Assume that you purchased 200 shares of C-Mac Industries stock for $110 a share, that you received an annual dividend of $4.00 a share, and that you then sold your stock for $130 a share at the end of one year. What is the total profit on your investment? (Ignore commission amounts for this question.)

Accepted Answer

A)  $200 
B)  $400 
C)  $1,200 
D)  $800 
E)  $2,200 
A)  $200 
B)  $400 
C)  $1,200 
D)  $800 
E)  $2,200

Question 7

When investors are optimistic about the overall economy and buy stocks, it is known as a(n) ____________ market.

Accepted Answer

A)  book 
B)  bear 
C)  bull 
D)  equity 
E)  declining 
A)  book 
B)  bear 
C)  bull 
D)  equity 
E)  declining

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

An investment bank is a financial institution where large corporations can deposit excess cash for short periods of time.

Accepted Answer

A) True 
 B)False

Question 10

Today, it is possible for investors to access a corporation's home page in order to evaluate an investment in its stock.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

A private corporation is a corporation whose stocks are traded openly in stock markets and maybe purchased by individuals.

Accepted Answer

A) True 
 B)False

Question 13

The most important priority that an investor in common stock enjoys is receiving cash dividends before preferred stockholders are paid any cash dividends.

Accepted Answer

A) True 
 B)False

Question 14

Dividends remain with the stock until

Accepted Answer

A)  five days after the date of record. 
B)  two business days after the date of record. 
C)  five days before the date of record. 
D)  two business days before the date of record. 
E)  five days before the actual payment date. 
A)  five days after the date of record. 
B)  two business days after the date of record. 
C)  five days before the date of record. 
D)  two business days before the date of record. 
E)  five days before the actual payment date.

Question 15

Which of the following statements is not true?

Accepted Answer

A)  When an investor buys stocks and assumes they will increase in value, he or she is using a procedure called buying long. 
B)  Selling short is selling stock that has been borrowed from a stockbroker or brokerage firm. 
C)  When you sell short, you buy today, knowing that 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 loses money. 
E)  To make money in a short transaction, you must be correct in predicting that a stock will decrease in value. 
A)  When an investor buys stocks and assumes they will increase in value, he or she is using a procedure called buying long. 
B)  Selling short is selling stock that has been borrowed from a stockbroker or brokerage firm. 
C)  When you sell short, you buy today, knowing that 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 loses money. 
E)  To make money in a short transaction, you must be correct in predicting that a stock will decrease in value.

Question 16

Dividend payments on common stock are guaranteed, but the amount is determined by the board of directors.

Accepted Answer

A) True 
 B)False

Question 17

A penny stock typically sells for less than $.10 a share

Accepted Answer

A) True 
 B)False

Question 18

A speculative technique whereby an investor borrows part of the money needed to buy a particular stock.

Accepted Answer

A)  dollar cost averaging. 
B)  dividend reinvestment plan. 
C)  buy and hold technique. 
D)  margin. 
E)  secured transaction. 
A)  dollar cost averaging. 
B)  dividend reinvestment plan. 
C)  buy and hold technique. 
D)  margin. 
E)  secured transaction.

Question 19

The annual dividend yield is calculated by dividing the annual dividend by the initial stock investment.

Accepted Answer

A) True 
 B)False

Question 20

A stock that pays higher than average dividends is called a(n) ____________ stock.

Accepted Answer

A)  defensive 
B)  income 
C)  growth 
D)  cyclical 
E)  blue-chip 
A)  defensive 
B)  income 
C)  growth 
D)  cyclical 
E)  blue-chip

Doug Baker bought Toronto Dominion stocks for $50 a share one year ago. He sold the stock a year later for $55.50 a share. What was John's capital gains yield?

Which of the following statements is not true?

If an investor owns participating preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

A securities exchange is a marketplace where member brokers who are representing investors meet to buy and sell securities.

A stock that follows the business cycle of advances and declines in the economy is called a(n) ____________ stock.

When investors are optimistic about the overall economy and buy stocks, it is known as a(n) ____________ market.

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

An investment bank is a financial institution where large corporations can deposit excess cash for short periods of time.

Today, it is possible for investors to access a corporation's home page in order to evaluate an investment in its stock.

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

A private corporation is a corporation whose stocks are traded openly in stock markets and maybe purchased by individuals.

The most important priority that an investor in common stock enjoys is receiving cash dividends before preferred stockholders are paid any cash dividends.

Dividends remain with the stock until

Which of the following statements is not true?

Dividend payments on common stock are guaranteed, but the amount is determined by the board of directors.

A penny stock typically sells for less than $.10 a share

A speculative technique whereby an investor borrows part of the money needed to buy a particular stock.

The annual dividend yield is calculated by dividing the annual dividend by the initial stock investment.

A stock that pays higher than average dividends is called a(n) ____________ stock.

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters

Exam 11: Investing in Stocks

Doug Baker bought Toronto Dominion stocks for $50 a share one year ago. He sold the stock a year later for $55.50 a share. What was John's capital gains yield?

Which of the following statements is not true?

If an investor owns participating preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

A securities exchange is a marketplace where member brokers who are representing investors meet to buy and sell securities.

A stock that follows the business cycle of advances and declines in the economy is called a(n) ____________ stock.

When investors are optimistic about the overall economy and buy stocks, it is known as a(n) ____________ market.

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

An investment bank is a financial institution where large corporations can deposit excess cash for short periods of time.

Today, it is possible for investors to access a corporation's home page in order to evaluate an investment in its stock.

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

A private corporation is a corporation whose stocks are traded openly in stock markets and maybe purchased by individuals.

The most important priority that an investor in common stock enjoys is receiving cash dividends before preferred stockholders are paid any cash dividends.

Dividends remain with the stock until

Which of the following statements is not true?

Dividend payments on common stock are guaranteed, but the amount is determined by the board of directors.

A penny stock typically sells for less than $.10 a share

A speculative technique whereby an investor borrows part of the money needed to buy a particular stock.

The annual dividend yield is calculated by dividing the annual dividend by the initial stock investment.

A stock that pays higher than average dividends is called a(n) ____________ stock.

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters