Question 1

Since 1926, the average annual return for stocks is just over 12% as measured by the Standard & Poor's 500 stock index.

Accepted Answer

A) True 
 B)False  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. B

Question 3

If you want to compare two companies, you should use

Accepted Answer

A)  Book value per share. 
B)  Dividend yield. 
C)  Price per share. 
D)  Net income. 
E)  Price-earnings ratio. 
A)  Book value per share. 
B)  Dividend yield. 
C)  Price per share. 
D)  Net income. 
E)  Price-earnings ratio. E

Question 4

Given the information shown here for TUV, Inc., calculate the total return. • Dividends per share = $1.50
• Purchase price (July 15, 2010) = $50.00
• Sell price (July 15, 2011) = $56.00

Accepted Answer

A)  ($6.00) 
B)  ($4.50) 
C)  $1.50 
D)  $6.00 
E)  $7.50 
A)  ($6.00) 
B)  ($4.50) 
C)  $1.50 
D)  $6.00 
E)  $7.50

Question 5

If you buy common stock, you may receive income from

Accepted Answer

A)  Dividends. 
B)  Dollar appreciation of stock value. 
C)  Possible increases in value from stock splits. 
D)  Two of these are correct. 
E)  All of these are correct. 
A)  Dividends. 
B)  Dollar appreciation of stock value. 
C)  Possible increases in value from stock splits. 
D)  Two of these are correct. 
E)  All of these are correct.

Question 6

Given the information shown here for QRS Inc., calculate the book value. 
• Assets = $18,000,000
• Liabilities = $10,000,000
• Number of shares outstanding = 2,000,000

Accepted Answer

A)  $1.33 
B)  $2.50 
C)  $3.50 
D)  $4.00 
E)  $7.50 
A)  $1.33 
B)  $2.50 
C)  $3.50 
D)  $4.00 
E)  $7.50

Question 7

Experts predict that the next "great" investments will be companies that produce alternative fuels, fuel cells, hybrid vehicles, and organic foods.

Accepted Answer

A) True 
 B)False

Question 8

Avery is thinking about using the computer to do his investing. To justify using a computer instead of using telephone orders to buy and sell stock, he should consider all of the following except

Accepted Answer

A)  His ability to manage his investments closely 
B)  Whether he is an active investor or not 
C)  The size of his investment portfolio 
D)  None of these are appropriate. 
E)  A, B, and C are appropriate considerations. 
A)  His ability to manage his investments closely 
B)  Whether he is an active investor or not 
C)  The size of his investment portfolio 
D)  None of these are appropriate. 
E)  A, B, and C are appropriate considerations.

Question 9

Which of the following is not correct regarding preferred stock?

Accepted Answer

A)  Preferred stocks are considered to be safer investments than common stocks. 
B)  Owners of preferred stock have first claim to a corporation's assets after creditors in a bankruptcy. 
C)  Owners of preferred stock receive cash dividends before common stockholders receive their dividends. 
D)  The dollar amount of the dividend on preferred stock is known before the stock is purchased. 
E)  The yield on preferred stocks is often lower than the yield on corporate bonds. 
A)  Preferred stocks are considered to be safer investments than common stocks. 
B)  Owners of preferred stock have first claim to a corporation's assets after creditors in a bankruptcy. 
C)  Owners of preferred stock receive cash dividends before common stockholders receive their dividends. 
D)  The dollar amount of the dividend on preferred stock is known before the stock is purchased. 
E)  The yield on preferred stocks is often lower than the yield on corporate bonds.

Question 10

A stock issued by a company that has a capitalization between $50 and $300 million or less is called a _______ 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 11

Detailed research for stock investors can be found on the Yahoo! Finance website instead of at a stock advisory service such as Value Line.

Accepted Answer

A) True 
 B)False

Question 12

Jackson was interested in purchasing low-value securities that were not listed on the NYSE. He probably used _____ to complete his transaction.

Accepted Answer

A)  an initial public offering 
B)  an investment bank 
C)  the over-the-counter market 
D)  a primary market 
E)  the securities exchange commission website 
A)  an initial public offering 
B)  an investment bank 
C)  the over-the-counter market 
D)  a primary market 
E)  the securities exchange commission website

Question 13

Alberta owns 100 shares of stock of ABC Company, and Bobby owns 200 shares of the same stock. If ABC Company pays a $5 dividend to all stockholders with a record date of Friday, June 15, then

Accepted Answer

A)  Alberta will receive the same amount as Bobby if they owned the stock two business days before the record date. 
B)  Both will receive the dividend as long as they sell their stock three days before the record date. 
C)  Alberta will receive half as much as Bobby if they owned the stock two business days before the record date. 
D)  Both will receive the dividend if they bought the stock on the record date. 
E)  Alberta and Bobby will receive the same amount if they bought the shares at least one month before the record date. 
A)  Alberta will receive the same amount as Bobby if they owned the stock two business days before the record date. 
B)  Both will receive the dividend as long as they sell their stock three days before the record date. 
C)  Alberta will receive half as much as Bobby if they owned the stock two business days before the record date. 
D)  Both will receive the dividend if they bought the stock on the record date. 
E)  Alberta and Bobby will receive the same amount if they bought the shares at least one month before the record date.

Question 14

A micro cap stock is one issued by a company that has a capitalization of $500 million or less.

Accepted Answer

A) True 
 B)False

Question 15

Total return equals

Accepted Answer

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Kelly bought some stock using an investment bank from the issuer of those securities. She bought her shares

Accepted Answer

A)  From a specialist. 
B)  From an Investment bank. 
C)  On the Primary market. 
D)  On the Secondary market. 
E)  From a Securities exchange. 
A)  From a specialist. 
B)  From an Investment bank. 
C)  On the Primary market. 
D)  On the Secondary market. 
E)  From a Securities exchange.

Question 18

Which of the following is true?

Accepted Answer

A)  Mergent's Handbook of Common Stocks is a misnomer because it analyzes only industries. 
B)  Standard & Poor's reports are available only on the Internet. 
C)  Stock advisory services include printed materials ranging from alphabetical listings to detailed financial reports. 
D)  Value Line is the only reliable stock advisory service used by investors. 
E)  All of these are correct. 
A)  Mergent's Handbook of Common Stocks is a misnomer because it analyzes only industries. 
B)  Standard & Poor's reports are available only on the Internet. 
C)  Stock advisory services include printed materials ranging from alphabetical listings to detailed financial reports. 
D)  Value Line is the only reliable stock advisory service used by investors. 
E)  All of these are correct.

Question 19

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 20

The findings of a stock advisory service is the only information that an investor should rely on in order to make decisions about buying or selling stocks.

Accepted Answer

A) True 
 B)False

Since 1926, the average annual return for stocks is just over 12% as measured by the Standard & Poor's 500 stock index.

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

If you want to compare two companies, you should use

Given the information shown here for TUV, Inc., calculate the total return. • Dividends per share = $1.50 • Purchase price (July 15, 2010) = $50.00 • Sell price (July 15, 2011) = $56.00

If you buy common stock, you may receive income from

Given the information shown here for QRS Inc., calculate the book value. • Assets = $18,000,000 • Liabilities = $10,000,000 • Number of shares outstanding = 2,000,000

Experts predict that the next "great" investments will be companies that produce alternative fuels, fuel cells, hybrid vehicles, and organic foods.

Avery is thinking about using the computer to do his investing. To justify using a computer instead of using telephone orders to buy and sell stock, he should consider all of the following except

Which of the following is not correct regarding preferred stock?

A stock issued by a company that has a capitalization between $50 and $300 million or less is called a _______ stock.

Detailed research for stock investors can be found on the Yahoo! Finance website instead of at a stock advisory service such as Value Line.

Jackson was interested in purchasing low-value securities that were not listed on the NYSE. He probably used _____ to complete his transaction.

Alberta owns 100 shares of stock of ABC Company, and Bobby owns 200 shares of the same stock. If ABC Company pays a $5 dividend to all stockholders with a record date of Friday, June 15, then

A micro cap stock is one issued by a company that has a capitalization of $500 million or less.

Total return equals

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

Kelly bought some stock using an investment bank from the issuer of those securities. She bought her shares

Which of the following is true?

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

The findings of a stock advisory service is the only information that an investor should rely on in order to make decisions about buying or selling stocks.

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing Fundamentals and Bonds

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

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Exam 12: Investing in Stocks

Since 1926, the average annual return for stocks is just over 12% as measured by the Standard & Poor's 500 stock index.

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

If you want to compare two companies, you should use

Given the information shown here for TUV, Inc., calculate the total return. • Dividends per share = $1.50 • Purchase price (July 15, 2010) = $50.00 • Sell price (July 15, 2011) = $56.00

If you buy common stock, you may receive income from

Given the information shown here for QRS Inc., calculate the book value. • Assets = $18,000,000 • Liabilities = $10,000,000 • Number of shares outstanding = 2,000,000

Experts predict that the next "great" investments will be companies that produce alternative fuels, fuel cells, hybrid vehicles, and organic foods.

Avery is thinking about using the computer to do his investing. To justify using a computer instead of using telephone orders to buy and sell stock, he should consider all of the following except

Which of the following is not correct regarding preferred stock?

A stock issued by a company that has a capitalization between $50 and $300 million or less is called a _______ stock.

Detailed research for stock investors can be found on the Yahoo! Finance website instead of at a stock advisory service such as Value Line.

Jackson was interested in purchasing low-value securities that were not listed on the NYSE. He probably used _____ to complete his transaction.

Alberta owns 100 shares of stock of ABC Company, and Bobby owns 200 shares of the same stock. If ABC Company pays a $5 dividend to all stockholders with a record date of Friday, June 15, then

A micro cap stock is one issued by a company that has a capitalization of $500 million or less.

Total return equals

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

Kelly bought some stock using an investment bank from the issuer of those securities. She bought her shares

Which of the following is true?

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

The findings of a stock advisory service is the only information that an investor should rely on in order to make decisions about buying or selling stocks.

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing Fundamentals and Bonds

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters