Question 1

When XYZ wanted to sell new security issues to the general public for the first time, it sought the assistance 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

Preferred stockholders elect the board of directors.

Accepted Answer

A) True 
 B)False

Question 3

Excessive buying and selling of securities to generate commissions is called

Accepted Answer

A)  Churning. 
B)  Flipping. 
C)  Marketing. 
D)  Prospecting. 
E)  Scamming. 
A)  Churning. 
B)  Flipping. 
C)  Marketing. 
D)  Prospecting. 
E)  Scamming.

Question 4

The total return can be calculated only if a company pays dividends.

Accepted Answer

A) True 
 B)False

Question 5

Using the information given here, what are the earnings per share for DEF Company? 
• Earnings = $180,000
• Number of shares outstanding = 60,000
• Price per share = $30
• Book value per share = $10

Accepted Answer

A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $5.00 
E)  $6.00 
A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $5.00 
E)  $6.00

Question 6

Using the information given here, what is the price-earnings ratio for DEF Company?
• After-tax income = $180,000
• Number of shares outstanding = 60,000
• Price per share = $30
• Book value per share = $10
• Earnings per share = $3.00

Accepted Answer

A)  $3.00 
B)  $4.00 
C)  $7.50 
D)  $10.00 
E)  $20.00 
A)  $3.00 
B)  $4.00 
C)  $7.50 
D)  $10.00 
E)  $20.00

Question 7

Tanya understands the "how to" of researching stocks and likes to make her own decisions. However, she is not comfortable using the Internet to trade stocks. 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 8

Which of the following is not correct?

Accepted Answer

A)  You pay interest on money borrowed to purchase stock on margin. 
B)  Selling short is selling stock borrowed from a brokerage firm. 
C)  A option is the right to buy or sell a stock at a predetermined price during a specified period of time. 
D)  A brokerage firm receives double its commission when stock is bought and sold when the investor is selling short. 
E)  If the stock price decreases and you purchased that stock on margin, you may receive a margin call. 
A)  You pay interest on money borrowed to purchase stock on margin. 
B)  Selling short is selling stock borrowed from a brokerage firm. 
C)  A option is the right to buy or sell a stock at a predetermined price during a specified period of time. 
D)  A brokerage firm receives double its commission when stock is bought and sold when the investor is selling short. 
E)  If the stock price decreases and you purchased that stock on margin, you may receive a margin call.

Question 9

If you sold 100 shares of ABCD stock for $40 a share that you originally purchased for $33 a share, then your capital gain would be $700.

Accepted Answer

A) True 
 B)False

Question 10

If the record date is Friday, April 7, then the ex-dividend date is Tuesday, April 11.

Accepted Answer

A) True 
 B)False

Question 11

MNOP Inc. declared a $1.00 dividend with a record date of Thursday, September 15, and a payment date of Thursday, October 20. Cheri does not want receive this current dividend. What is the earliest date that she should purchase the stock in order to avoid receiving the dividend?

Accepted Answer

A)  September 12 
B)  September 13 
C)  September 15 
D)  October 18 
E)  October 20 
A)  September 12 
B)  September 13 
C)  September 15 
D)  October 18 
E)  October 20

Question 12

Mallory wants to purchase stock at the current market price. She should use a

Accepted Answer

A)  Current sale order. 
B)  Limit order. 
C)  Market order. 
D)  Stop order. 
E)  Stop-loss order. 
A)  Current sale order. 
B)  Limit order. 
C)  Market order. 
D)  Stop order. 
E)  Stop-loss order.

Question 13

Gavin has owned MNOP stock for several years and has seen the stock increase in value from $20 to $35. He wants to "lock in" his gains, so he needs to place an order that will sell his stock at the next available opportunity after its market price drops to $33. What kind of order should he use?

Accepted Answer

A)  Current sale order. 
B)  Limit order. 
C)  Market order. 
D)  Stop-loss order. 
E)  None of these. 
A)  Current sale order. 
B)  Limit order. 
C)  Market order. 
D)  Stop-loss order. 
E)  None of these.

Question 14

Dividend yield equals

Accepted Answer

A)  Annual dividend amount/Current price per share. 
B)  Quarterly dividend amount/Price per share. 
C)  Annual dividend amount/Book value per share. 
D)  Quarterly dividend amount/Book value per share. 
E)  Annual dividend amount/Earnings per share. 
A)  Annual dividend amount/Current price per share. 
B)  Quarterly dividend amount/Price per share. 
C)  Annual dividend amount/Book value per share. 
D)  Quarterly dividend amount/Book value per share. 
E)  Annual dividend amount/Earnings per share.

Question 15

The NYSE is an example of a(n)

Accepted Answer

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

Question 16

Detailed financial reports from advisory services such as Value Line include all of the following sections except

Accepted Answer

A)  Top of the report includes price information and price projections for a share of stock. 
B)  Middle of the report includes revenues, earnings per share, dividends, etc. 
C)  Bottom of the report includes information about the type of business and prospects for the future. 
D)  None of the above are included. 
E)  All of the information in A, B, and C are included in financial reports. 
A)  Top of the report includes price information and price projections for a share of stock. 
B)  Middle of the report includes revenues, earnings per share, dividends, etc. 
C)  Bottom of the report includes information about the type of business and prospects for the future. 
D)  None of the above are included. 
E)  All of the information in A, B, and C are included in financial reports.

Question 17

Sandy has invested in a stock. She is assured of receiving a dividend.

Accepted Answer

A) True 
 B)False

Question 18

NYSE stands for

Accepted Answer

A)  New York Securities Exchange. 
B)  New York Stock Exchange. 
C)  New York School of Engineering. 
D)  Never Yet So Even. 
E)  New Year Selling Exchange. 
A)  New York Securities Exchange. 
B)  New York Stock Exchange. 
C)  New York School of Engineering. 
D)  Never Yet So Even. 
E)  New Year Selling Exchange.

Question 19

Gregory bought 500 shares of stock at a price of $60 per share. He later sold his stock at a price of $56. What was his total return on his investment?

Accepted Answer

A)  $2,000 capital loss 
B)  $60 capital loss 
C)  $4 capital gain 
D)  $2,000 capital gain 
E)  $26,500 capital gain 
A)  $2,000 capital loss 
B)  $60 capital loss 
C)  $4 capital gain 
D)  $2,000 capital gain 
E)  $26,500 capital gain

Question 20

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.

When XYZ wanted to sell new security issues to the general public for the first time, it sought the assistance of a (n).

Preferred stockholders elect the board of directors.

Excessive buying and selling of securities to generate commissions is called

The total return can be calculated only if a company pays dividends.

Using the information given here, what are the earnings per share for DEF Company? • Earnings = $180,000 • Number of shares outstanding = 60,000 • Price per share = $30 • Book value per share = $10

Using the information given here, what is the price-earnings ratio for DEF Company? • After-tax income = $180,000 • Number of shares outstanding = 60,000 • Price per share = $30 • Book value per share = $10 • Earnings per share = $3.00

Tanya understands the "how to" of researching stocks and likes to make her own decisions. However, she is not comfortable using the Internet to trade stocks. She should use a(n)

Which of the following is not correct?

If you sold 100 shares of ABCD stock for $40 a share that you originally purchased for $33 a share, then your capital gain would be $700.

If the record date is Friday, April 7, then the ex-dividend date is Tuesday, April 11.

MNOP Inc. declared a $1.00 dividend with a record date of Thursday, September 15, and a payment date of Thursday, October 20. Cheri does not want receive this current dividend. What is the earliest date that she should purchase the stock in order to avoid receiving the dividend?

Mallory wants to purchase stock at the current market price. She should use a

Gavin has owned MNOP stock for several years and has seen the stock increase in value from $20 to $35. He wants to "lock in" his gains, so he needs to place an order that will sell his stock at the next available opportunity after its market price drops to $33. What kind of order should he use?

Dividend yield equals

The NYSE is an example of a(n)

Detailed financial reports from advisory services such as Value Line include all of the following sections except

Sandy has invested in a stock. She is assured of receiving a dividend.

NYSE stands for

Gregory bought 500 shares of stock at a price of $60 per share. He later sold his stock at a price of $56. What was his total return on his investment?

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

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Taxes in Your Financial Plan

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Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

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Home and Automobile Insurance

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Financial Planning With Life Insurance

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Starting Early: Retirement and Estate Planning

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Exam 12: Investing in Stocks

When XYZ wanted to sell new security issues to the general public for the first time, it sought the assistance of a (n).

Preferred stockholders elect the board of directors.

Excessive buying and selling of securities to generate commissions is called

The total return can be calculated only if a company pays dividends.

Using the information given here, what are the earnings per share for DEF Company? • Earnings = $180,000 • Number of shares outstanding = 60,000 • Price per share = $30 • Book value per share = $10

Using the information given here, what is the price-earnings ratio for DEF Company? • After-tax income = $180,000 • Number of shares outstanding = 60,000 • Price per share = $30 • Book value per share = $10 • Earnings per share = $3.00

Tanya understands the "how to" of researching stocks and likes to make her own decisions. However, she is not comfortable using the Internet to trade stocks. She should use a(n)

Which of the following is not correct?

If you sold 100 shares of ABCD stock for $40 a share that you originally purchased for $33 a share, then your capital gain would be $700.

If the record date is Friday, April 7, then the ex-dividend date is Tuesday, April 11.

MNOP Inc. declared a $1.00 dividend with a record date of Thursday, September 15, and a payment date of Thursday, October 20. Cheri does not want receive this current dividend. What is the earliest date that she should purchase the stock in order to avoid receiving the dividend?

Mallory wants to purchase stock at the current market price. She should use a

Gavin has owned MNOP stock for several years and has seen the stock increase in value from $20 to $35. He wants to "lock in" his gains, so he needs to place an order that will sell his stock at the next available opportunity after its market price drops to $33. What kind of order should he use?

Dividend yield equals

The NYSE is an example of a(n)

Detailed financial reports from advisory services such as Value Line include all of the following sections except

Sandy has invested in a stock. She is assured of receiving a dividend.

NYSE stands for

Gregory bought 500 shares of stock at a price of $60 per share. He later sold his stock at a price of $56. What was his total return on his investment?

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

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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