Question 1

One would prefer a stock with steadily increasing earnings per share and return on equity.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would be a disadvantage of owning an income stock?

Accepted Answer

A)  High and growing dividends 
B)  High but declining dividends 
C)  Lower growth potential 
D)  High potential for capital growth 
E)  Tend to be solid blue chip stocks 
A)  High and growing dividends 
B)  High but declining dividends 
C)  Lower growth potential 
D)  High potential for capital growth 
E)  Tend to be solid blue chip stocks

Question 3

You would expect more growth with the preferred stock you own than with the common stock in your portfolio.

Accepted Answer

A) True 
 B)False

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The commonly-cited price for a bond is usually its [clean | dirty] bond price.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 5

When evaluating a stock as a possible investment,one must consider

Accepted Answer

A)  the current market price. 
B)  the expected capital gain. 
C)  the expected dividend income. 
D)  one's investment goals. 
E)  all of the above 
A)  the current market price. 
B)  the expected capital gain. 
C)  the expected dividend income. 
D)  one's investment goals. 
E)  all of the above

Question 6

A bond with a S&P rating of BBB is considered investment-grade.

Accepted Answer

A) True 
 B)False

Question 7

There is an inverse relationship between the bond prices and current interest rates.

Accepted Answer

A) True 
 B)False

Question 8

When cash dividends on stock are paid,but the stockholder has these dividends automatically reinvested,what are the federal income tax implications?

Accepted Answer

A)  Taxes must be paid in the year the dividends are paid at ordinary income tax rates. 
B)  Taxes must be paid in the year the dividends are paid at long-term capital gains rates. 
C)  Taxes must be paid,but not until the stockholder sells the stock that was purchased through the dividend reinvestment plan. 
D)  Taxes do not have to be paid on these dividends--ever. 
E)  Either a or c -- it is up to the investor to make the choice. 
A)  Taxes must be paid in the year the dividends are paid at ordinary income tax rates. 
B)  Taxes must be paid in the year the dividends are paid at long-term capital gains rates. 
C)  Taxes must be paid,but not until the stockholder sells the stock that was purchased through the dividend reinvestment plan. 
D)  Taxes do not have to be paid on these dividends--ever. 
E)  Either a or c -- it is up to the investor to make the choice.

Question 9

Bond prices are impacted by both the direction and magnitude of interest rate changes.

Accepted Answer

A) True 
 B)False

Question 10

____ stocks would generally be considered appropriate for investors who fully understand the risks involved and can tolerate such risk exposure.

Accepted Answer

A)  Large-cap 
B)  Mid-cap 
C)  Penny 
D)  Small-cap 
E)  B and d 
A)  Large-cap 
B)  Mid-cap 
C)  Penny 
D)  Small-cap 
E)  B and d

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The stock market as a whole has a beta of [+1.0 | -1.0].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 12

Capital appreciation of an investment is a form of Current Income.

Accepted Answer

A) True 
 B)False

Question 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-You are looking for a guaranteed steady stream of income; you should invest in [stocks | bonds].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Stock dividends represent [taxable | nontaxable] income.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 15

Low price/earnings ratios indicate limited or low investor confidence.

Accepted Answer

A) True 
 B)False

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Common stockholders usually receive one vote per [person | share].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 17

The commonly-cited price for a bond is usually its clean bond price.

Accepted Answer

A) True 
 B)False

Question 18

The higher the tax bracket you are in,the more attractive the purchase of municipal bonds becomes.

Accepted Answer

A) True 
 B)False

Question 19

Stock profitability is often measured by

Accepted Answer

A)  book value. 
B)  return on equity. 
C)  market value. 
D)  net profit margin. 
E)  beta. 
A)  book value. 
B)  return on equity. 
C)  market value. 
D)  net profit margin. 
E)  beta.

Question 20

At the time you buy a convertible bond,you will know the number of stock shares for which it can be exchanged.

Accepted Answer

A) True 
 B)False

One would prefer a stock with steadily increasing earnings per share and return on equity.

Which of the following would be a disadvantage of owning an income stock?

You would expect more growth with the preferred stock you own than with the common stock in your portfolio.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The commonly-cited price for a bond is usually its [clean | dirty] bond price.

When evaluating a stock as a possible investment,one must consider

A bond with a S&P rating of BBB is considered investment-grade.

There is an inverse relationship between the bond prices and current interest rates.

When cash dividends on stock are paid,but the stockholder has these dividends automatically reinvested,what are the federal income tax implications?

Bond prices are impacted by both the direction and magnitude of interest rate changes.

____ stocks would generally be considered appropriate for investors who fully understand the risks involved and can tolerate such risk exposure.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The stock market as a whole has a beta of [+1.0 | -1.0].

Capital appreciation of an investment is a form of Current Income.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You are looking for a guaranteed steady stream of income; you should invest in [stocks | bonds].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Stock dividends represent [taxable | nontaxable] income.

Low price/earnings ratios indicate limited or low investor confidence.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Common stockholders usually receive one vote per [person | share].

The commonly-cited price for a bond is usually its clean bond price.

The higher the tax bracket you are in,the more attractive the purchase of municipal bonds becomes.

Stock profitability is often measured by

At the time you buy a convertible bond,you will know the number of stock shares for which it can be exchanged.

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Mutual Funds

Planning for Retirement

Preserving Your Estate

Filters

Exam 12: Investing in Stocks and Bonds

One would prefer a stock with steadily increasing earnings per share and return on equity.

Which of the following would be a disadvantage of owning an income stock?

You would expect more growth with the preferred stock you own than with the common stock in your portfolio.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The commonly-cited price for a bond is usually its [clean | dirty] bond price.

When evaluating a stock as a possible investment,one must consider

A bond with a S&P rating of BBB is considered investment-grade.

There is an inverse relationship between the bond prices and current interest rates.

When cash dividends on stock are paid,but the stockholder has these dividends automatically reinvested,what are the federal income tax implications?

Bond prices are impacted by both the direction and magnitude of interest rate changes.

____ stocks would generally be considered appropriate for investors who fully understand the risks involved and can tolerate such risk exposure.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The stock market as a whole has a beta of [+1.0 | -1.0].

Capital appreciation of an investment is a form of Current Income.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You are looking for a guaranteed steady stream of income; you should invest in [stocks | bonds].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Stock dividends represent [taxable | nontaxable] income.

Low price/earnings ratios indicate limited or low investor confidence.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Common stockholders usually receive one vote per [person | share].

The commonly-cited price for a bond is usually its clean bond price.

The higher the tax bracket you are in,the more attractive the purchase of municipal bonds becomes.

Stock profitability is often measured by

At the time you buy a convertible bond,you will know the number of stock shares for which it can be exchanged.

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Mutual Funds

Planning for Retirement

Preserving Your Estate

Filters