Question 1

The EPS of a company can be compared to the industry's average EPS.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is incorrect?

Accepted Answer

A)  There is no substitute for researching a potential investment. 
B)  Beginning investors sometimes worry that they won't know what the information they find about stocks really means. 
C)  Some investors do not know where to get the information they need to evaluate potential investments. 
D)  Very little information is available about stocks. 
E)  All of these statements are correct. 
A)  There is no substitute for researching a potential investment. 
B)  Beginning investors sometimes worry that they won't know what the information they find about stocks really means. 
C)  Some investors do not know where to get the information they need to evaluate potential investments. 
D)  Very little information is available about stocks. 
E)  All of these statements are correct.

Question 3

If you purchase stock from another investor, such as your cousin Sam, then you are buying stock on the primary market.

Accepted Answer

A) True 
 B)False

Question 4

Dividend policies vary among corporations, but most firms distribute between 30 and 70 percent of their earnings to stockholders.

Accepted Answer

A) True 
 B)False

Question 5

The execution of a limit order will be the highest priority above previously received orders if and when the specified price is reached.

Accepted Answer

A) True 
 B)False

Question 6

If you bought a stock on July 1, 2014, and sold it on July 15, 2014, 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 7

Megan decided to start investing in stocks. Which of the following should she do first?

Accepted Answer

A)  Base her investing decisions on hot tips she hears at work. 
B)  Buy stocks based solely on her stockbroker's recommendation. 
C)  Choose stocks based on recommendations from her family members. 
D)  Pick stocks at random. 
E)  Research the corporations she is interested in as well as their industries. 
A)  Base her investing decisions on hot tips she hears at work. 
B)  Buy stocks based solely on her stockbroker's recommendation. 
C)  Choose stocks based on recommendations from her family members. 
D)  Pick stocks at random. 
E)  Research the corporations she is interested in as well as their industries.

Question 8

Investors who earn larger returns because they borrow part of the money needed to by a particular stock are using which of the following techniques?

Accepted Answer

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

Question 9

Mike bought 200 shares of PDQ stock on margin at $15/share. The stock increased to $21/share. What was Mike's profit?

Accepted Answer

A)  $600 
B)  $1,200 
C)  $3,000 
D)  $4,200 
E)  $5,200 
A)  $600 
B)  $1,200 
C)  $3,000 
D)  $4,200 
E)  $5,200

Question 10

Generally, 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 11

Dividends for common stock must be in cash.

Accepted Answer

A) True 
 B)False

Question 12

A stock issued by a stable corporation that generally attracts conservative investors 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 13

The opportunity, but not the obligation, to sell 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 14

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

Accepted Answer

A)  At an Initial public offering. 
B)  Through an Investment bank. 
C)  In the Primary market. 
D)  In the Secondary market. 
E)  At a Securities exchange. 
A)  At an Initial public offering. 
B)  Through an Investment bank. 
C)  In the Primary market. 
D)  In the Secondary market. 
E)  At a Securities exchange.

Question 15

Gloria bought ABC stock on March 4, 2014, at a price of $5.87 and then quickly sold it on March 19, 2014, at $11.20. Gloria is classified as a speculator.

Accepted Answer

A) True 
 B)False

Question 16

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 17

The formula "(Assets - Liabilities)/Number of Shares outstanding" equals

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 18

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 19

Annual reports

Accepted Answer

A)  Are available only online from a corporation's internet website. 
B)  Are available only to current stockholders. 
C)  Include the same information as a prospectus. 
D)  May be sent to all stockholders on an annual basis. 
E)  Include estimated financial data only. 
A)  Are available only online from a corporation's internet website. 
B)  Are available only to current stockholders. 
C)  Include the same information as a prospectus. 
D)  May be sent to all stockholders on an annual basis. 
E)  Include estimated financial data only.

Question 20

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

The EPS of a company can be compared to the industry's average EPS.

Which of the following is incorrect?

If you purchase stock from another investor, such as your cousin Sam, then you are buying stock on the primary market.

Dividend policies vary among corporations, but most firms distribute between 30 and 70 percent of their earnings to stockholders.

The execution of a limit order will be the highest priority above previously received orders if and when the specified price is reached.

If you bought a stock on July 1, 2014, and sold it on July 15, 2014, you may be a(n)

Megan decided to start investing in stocks. Which of the following should she do first?

Investors who earn larger returns because they borrow part of the money needed to by a particular stock are using which of the following techniques?

Mike bought 200 shares of PDQ stock on margin at $15/share. The stock increased to $21/share. What was Mike's profit?

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

Dividends for common stock must be in cash.

A stock issued by a stable corporation that generally attracts conservative investors is called a(n) _______ stock.

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

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

Gloria bought ABC stock on March 4, 2014, at a price of $5.87 and then quickly sold it on March 19, 2014, at $11.20. Gloria is classified as a speculator.

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

The formula "(Assets - Liabilities)/Number of Shares outstanding" equals

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

Annual reports

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

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

The EPS of a company can be compared to the industry's average EPS.

Which of the following is incorrect?

If you purchase stock from another investor, such as your cousin Sam, then you are buying stock on the primary market.

Dividend policies vary among corporations, but most firms distribute between 30 and 70 percent of their earnings to stockholders.

The execution of a limit order will be the highest priority above previously received orders if and when the specified price is reached.

If you bought a stock on July 1, 2014, and sold it on July 15, 2014, you may be a(n)

Megan decided to start investing in stocks. Which of the following should she do first?

Investors who earn larger returns because they borrow part of the money needed to by a particular stock are using which of the following techniques?

Mike bought 200 shares of PDQ stock on margin at $15/share. The stock increased to $21/share. What was Mike's profit?

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

Dividends for common stock must be in cash.

A stock issued by a stable corporation that generally attracts conservative investors is called a(n) _______ stock.

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

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

Gloria bought ABC stock on March 4, 2014, at a price of $5.87 and then quickly sold it on March 19, 2014, at $11.20. Gloria is classified as a speculator.

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

The formula "(Assets - Liabilities)/Number of Shares outstanding" equals

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

Annual reports

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

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