Exam 12: Investing in Stocks and Bonds

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Annual dividends per share divided by market price per share equals [total yield | dividend yield].

An investment is acceptable if the expected rate of return is greater than the desired rate of return.

John and Mary Smith own 500 shares of ABE stock.After the company pays a 6 percent stock dividend,John and Mary will own 530 shares of ABE stock.

The ____ of a stock reflects stockholder confidence.

Julie Johnson is in the 31 percent tax bracket.If she were to purchase a $1,000 municipal bond that had a stated interest rate of 6.5%,the taxable equivalent yield would be

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You would expect the higher rate of interest from a bond with a [AAA | C] bond rating.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Zero-coupon bonds would be more appropriate for a [tax-deferred retirement account | taxable account].

Interest rate risk is greater for stocks than for bonds.

A company has a beta of 1.0; if the market goes down by 8%,the value of the company's stock will

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The safest bond you could purchase would be a [corporate | Treasury] bond.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Treasury securities are yielding 6%.A growth stock with an expected return of 8% [would | would not] be considered a viable investment candidate by most investors.

Bonds can be used conservatively by investors seeking current income and aggressively by investors seeking capital gains.

Calculate the earnings per share of a company with the following information?

A premium bond sells at par value.

Market risk considers the possibility that the firm may fail.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Stock dividends are usually paid [monthly | annually | semi-annually].

The easiest way to invest in foreign stock is to purchase

Which of the following is most likely to occur immediately following the announcement that the rating on a corporate bond has been lowered to junk status?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -A growth stock would be expected to pay a [high | low] level of dividends.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -A [cyclical | defensive] stock's price would tend to move in the same direction as the entire market.