Question 1

To most stockholders,the main advantages of common stock investment are

Accepted Answer

A)  attractive returns and active trading. 
B)  attractive returns and voting rights. 
C)  high dividends and active trading. 
D)  high risk and active trading. 
E)  high risk and attractive returns. 
A)  attractive returns and active trading. 
B)  attractive returns and voting rights. 
C)  high dividends and active trading. 
D)  high risk and active trading. 
E)  high risk and attractive returns.

Question 2

If Wristwatch Arm Corporation (WAC)has assets of $10 million,liabilities of $5 million,and preferred stock of $1 million,its book value is $6 million.

Accepted Answer

A) True 
 B)False

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-If the value of the underlying stock dropped drastically,the owner of a convertible bond [would still receive $1,000 | would receive the market value of the stock] at maturity.

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 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The best way to invest in foreign stocks is to buy [them directly on the foreign exchanges | ADR's].

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

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-[Bond | Common stock] prices would be most affected by interest rate risk.

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 6

Corporate ownership is evidenced by

Accepted Answer

A)  preferred stock. 
B)  common stock. 
C)  bonds. 
D)  capital gain. 
E)  property rights. 
A)  preferred stock. 
B)  common stock. 
C)  bonds. 
D)  capital gain. 
E)  property rights.

Question 7

The yields on municipal bonds are usually higher than the returns available from fully taxable issues.

Accepted Answer

A) True 
 B)False

Question 8

Bonds issued by subdivisions of the U.S.government but not guaranteed by the government are called

Accepted Answer

A)  federal bonds. 
B)  agency bonds. 
C)  treasury bonds. 
D)  municipal bonds. 
E)  trust bonds. 
A)  federal bonds. 
B)  agency bonds. 
C)  treasury bonds. 
D)  municipal bonds. 
E)  trust bonds.

Question 9

Which of the following types of bonds are unsecured?

Accepted Answer

A)  mortgage bond 
B)  equipment trust certificate 
C)  debenture bond 
D)  agency bond 
E)  all of the above are unsecured 
A)  mortgage bond 
B)  equipment trust certificate 
C)  debenture bond 
D)  agency bond 
E)  all of the above are unsecured

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Zero coupon bonds will pay interest [at maturity | annually].

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 11

Your convertible bond has a conversion ratio of 15 shares.Current market price of the common stock is $50/share.The conversion value of this bond is

Accepted Answer

A)  $150. 
B)  $500. 
C)  $650. 
D)  $750. 
E)  $900. 
A)  $150. 
B)  $500. 
C)  $650. 
D)  $750. 
E)  $900.

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The lower a stock's beta,the [less | more] volatile you can expect its price fluctuations to be.

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 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The issuer of your corporate bond has the right to retire it before maturity.You have a [callable | retireable] bond.

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

Earnings per share can be defined as the return earned on behalf of each share of common and preferred stock,calculated by dividing all earnings by the total number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 15

A bond selling below par value is selling at

Accepted Answer

A)  a discount. 
B)  its coupon value. 
C)  a premium. 
D)  maturity. 
E)  the highest effective yield. 
A)  a discount. 
B)  its coupon value. 
C)  a premium. 
D)  maturity. 
E)  the highest effective yield.

Question 16

Junk bonds have higher risk and similar returns to investment grade bonds.

Accepted Answer

A) True 
 B)False

Question 17

If the current price of an investment increases,what affect does the price increase have on approximate yield

Accepted Answer

A)  moderately increase yield 
B)  decrease yield 
C)  will not affect the yield 
D)  drastically increase yield 
E)  none of the above 
A)  moderately increase yield 
B)  decrease yield 
C)  will not affect the yield 
D)  drastically increase yield 
E)  none of the above

Question 18

Which of the following is an advantage of owning growth stocks?

Accepted Answer

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

Question 19

An example of event risk would be

Accepted Answer

A)  inflation. 
B)  a corporate takeover. 
C)  a newspaper article about the economy. 
D)  earnings announcements. 
E)  capital growth. 
A)  inflation. 
B)  a corporate takeover. 
C)  a newspaper article about the economy. 
D)  earnings announcements. 
E)  capital growth.

Question 20

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

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.

To most stockholders,the main advantages of common stock investment are

If Wristwatch Arm Corporation (WAC)has assets of $10 million,liabilities of $5 million,and preferred stock of $1 million,its book value is $6 million.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -If the value of the underlying stock dropped drastically,the owner of a convertible bond [would still receive $1,000 | would receive the market value of the stock] at maturity.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The best way to invest in foreign stocks is to buy [them directly on the foreign exchanges | ADR's].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[Bond | Common stock] prices would be most affected by interest rate risk.

Corporate ownership is evidenced by

The yields on municipal bonds are usually higher than the returns available from fully taxable issues.

Bonds issued by subdivisions of the U.S.government but not guaranteed by the government are called

Which of the following types of bonds are unsecured?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Zero coupon bonds will pay interest [at maturity | annually].

Your convertible bond has a conversion ratio of 15 shares.Current market price of the common stock is $50/share.The conversion value of this bond is

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The lower a stock's beta,the [less | more] volatile you can expect its price fluctuations to be.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The issuer of your corporate bond has the right to retire it before maturity.You have a [callable | retireable] bond.

Earnings per share can be defined as the return earned on behalf of each share of common and preferred stock,calculated by dividing all earnings by the total number of shares outstanding.

A bond selling below par value is selling at

Junk bonds have higher risk and similar returns to investment grade bonds.

If the current price of an investment increases,what affect does the price increase have on approximate yield

Which of the following is an advantage of owning growth stocks?

An example of event risk would be

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

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

To most stockholders,the main advantages of common stock investment are

If Wristwatch Arm Corporation (WAC)has assets of $10 million,liabilities of $5 million,and preferred stock of $1 million,its book value is $6 million.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -If the value of the underlying stock dropped drastically,the owner of a convertible bond [would still receive $1,000 | would receive the market value of the stock] at maturity.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The best way to invest in foreign stocks is to buy [them directly on the foreign exchanges | ADR's].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[Bond | Common stock] prices would be most affected by interest rate risk.

Corporate ownership is evidenced by

The yields on municipal bonds are usually higher than the returns available from fully taxable issues.

Bonds issued by subdivisions of the U.S.government but not guaranteed by the government are called

Which of the following types of bonds are unsecured?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Zero coupon bonds will pay interest [at maturity | annually].

Your convertible bond has a conversion ratio of 15 shares.Current market price of the common stock is $50/share.The conversion value of this bond is

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The lower a stock's beta,the [less | more] volatile you can expect its price fluctuations to be.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The issuer of your corporate bond has the right to retire it before maturity.You have a [callable | retireable] bond.

Earnings per share can be defined as the return earned on behalf of each share of common and preferred stock,calculated by dividing all earnings by the total number of shares outstanding.

A bond selling below par value is selling at

Junk bonds have higher risk and similar returns to investment grade bonds.

If the current price of an investment increases,what affect does the price increase have on approximate yield

Which of the following is an advantage of owning growth stocks?

An example of event risk would be

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

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