Question 1

Growth stocks are likely to pay high dividends.

Accepted Answer

A) True 
 B)False

Question 2

Use the following two columns of items to answer the matching questions below:
-preferred stock

Accepted Answer

A) first offering of a firm's stock to the public 
B) financial instruments that represent partial ownership of a firm 
C) investors owning this type of stock have priority over common stockholders in receiving dividends 
D) individual investors who buy and sell stocks within a day 
E) market where existing securities are sold
F)professionals responsible for clients' funds
G)facilities that allow investors to purchase or sell existing stocks
H)debt instruments issued by the government or corporations to borrow money from investors 
A) first offering of a firm's stock to the public 
B) financial instruments that represent partial ownership of a firm 
C) investors owning this type of stock have priority over common stockholders in receiving dividends 
D) individual investors who buy and sell stocks within a day 
E) market where existing securities are sold
F)professionals responsible for clients' funds
G)facilities that allow investors to purchase or sell existing stocks
H)debt instruments issued by the government or corporations to borrow money from investors

Question 3

The main difference(s)between a preferred stock in Company A that pays a $2.50 per share annual dividend and a common stock in Company A that also pays a $2.50 per share current annual dividend is (are)

Accepted Answer

A)  the common stock has potential for price appreciation due to company earning s growth. 
B)  the common stock dividend may increase but the preferred dividend is fixed in perpetuity. 
C)  the common stock could lose value if the company performance were to suffer. 
D)  all of the above are real differences between preferred and common stock in the same company. 
A)  the common stock has potential for price appreciation due to company earning s growth. 
B)  the common stock dividend may increase but the preferred dividend is fixed in perpetuity. 
C)  the common stock could lose value if the company performance were to suffer. 
D)  all of the above are real differences between preferred and common stock in the same company.

Question 4

Regarding dividends paid on common stock,

Accepted Answer

A)  older, established firms tend to pay lower dividends. 
B)  newer firms in growth industries tend to pay higher dividends. 
C)  some firms don't pay any dividends at all. 
D)  a firm with high dividends is likely to have high stock price appreciation. 
A)  older, established firms tend to pay lower dividends. 
B)  newer firms in growth industries tend to pay higher dividends. 
C)  some firms don't pay any dividends at all. 
D)  a firm with high dividends is likely to have high stock price appreciation.

Question 5

Stock prices are characterized by all of the following except they

Accepted Answer

A)  can plummet with poor economic conditions. 
B)  have a set lower limit. 
C)  can be affected by negative earnings. 
D)  can be affected by the quality of the company's management. 
A)  can plummet with poor economic conditions. 
B)  have a set lower limit. 
C)  can be affected by negative earnings. 
D)  can be affected by the quality of the company's management.

Question 6

Which of the following are not factors that may impact the return on stock or bond investments?

Accepted Answer

A)  An individual investor's comfort with the level of risk of an investment. 
B)  Recent weakness in China's economy. 
C)  Increasing interest rates in the U.S. economy. 
D)  Increasing inflation in the U.S. and Europe. 
A)  An individual investor's comfort with the level of risk of an investment. 
B)  Recent weakness in China's economy. 
C)  Increasing interest rates in the U.S. economy. 
D)  Increasing inflation in the U.S. and Europe.

Question 7

One difference between common and preferred stock is that preferred stock

Accepted Answer

A)  does not pay dividends. 
B)  offers more predictable income and more safety. 
C)  has greater potential for capital appreciation. 
D)  is issued more frequently than common stock. 
A)  does not pay dividends. 
B)  offers more predictable income and more safety. 
C)  has greater potential for capital appreciation. 
D)  is issued more frequently than common stock.

Question 8

What would be the annual compound return on a stock purchased at $20 per share,held for 5 years,and sold for $32.22? Ignore brokerage commissions and tax implications and assume the stock paid no dividends during the holding period.Round to the nearest whole percent if necessary.

Accepted Answer

A)  3% 
B)  10% 
C)  15% 
D)  16% 
A)  3% 
B)  10% 
C)  15% 
D)  16%

Question 9

You can reduce your risk by

Accepted Answer

A)  diversifying your investments. 
B)  having a shorter time horizon. 
C)  putting all of your investment in one successful company. 
D)  Both A and B are correct. 
A)  diversifying your investments. 
B)  having a shorter time horizon. 
C)  putting all of your investment in one successful company. 
D)  Both A and B are correct.

Question 10

Individual risk is

Accepted Answer

A)  objective. 
B)  a fixed percentage. 
C)  an individual's comfort with the risk-return relationship. 
D)  pretty much the same for everyone. 
A)  objective. 
B)  a fixed percentage. 
C)  an individual's comfort with the risk-return relationship. 
D)  pretty much the same for everyone.

Question 11

Corporate bonds

Accepted Answer

A)  offer a predictable return to investors in the form of interest or coupon payments. 
B)  maintain their value even in periods of changing interest rates. 
C)  appreciate in value as the maturity date nears. 
D)  lose value at the maturity date nears. 
A)  offer a predictable return to investors in the form of interest or coupon payments. 
B)  maintain their value even in periods of changing interest rates. 
C)  appreciate in value as the maturity date nears. 
D)  lose value at the maturity date nears.

Question 12

One of the factors impacting the risks of investments is the time period you have available to keep your money invested.

Accepted Answer

A) True 
 B)False

Question 13

What would be the market price of a stock that paid a constant $2.00 per year in dividends in perpetuity,if the expected market return for a risk of this type was 7.5%?

Accepted Answer

A)  $25 
B)  $100 
C)  $26.67 
D)  $27.50 
A)  $25 
B)  $100 
C)  $26.67 
D)  $27.50

Question 14

Newly issued securities are traded in the ________.

Accepted Answer

The answer of Newly issued securities are traded in the...

Question 15

If you bought stock for $3,000 a year ago,received no dividends,and sold it for $1,000,what is the return on your investment?

Accepted Answer

A)  -67% 
B)  0% 
C)  67% 
D)  -33% 
A)  -67% 
B)  0% 
C)  67% 
D)  -33%

Question 16

What return on investment would you earn if you bought a stock on 1/1/16 for $100,received a 1% per quarter dividend and sold the stock on 1/2/2017 for $107?

Accepted Answer

A)  9% 
B)  11.2% 
C)  12.07% 
D)  11% 
A)  9% 
B)  11.2% 
C)  12.07% 
D)  11%

Question 17

Which of the following is not true regarding preferred stock?

Accepted Answer

A)  Preferred stockholders have rights to the assets of the corporation before common stockholders. 
B)  Preferred stockholders have priority over common stockholders in receiving dividends. 
C)  Preferred stock has greater potential for capital appreciation than common stock. 
D)  The price of preferred stock is less volatile than the price of common stock. 
A)  Preferred stockholders have rights to the assets of the corporation before common stockholders. 
B)  Preferred stockholders have priority over common stockholders in receiving dividends. 
C)  Preferred stock has greater potential for capital appreciation than common stock. 
D)  The price of preferred stock is less volatile than the price of common stock.

Question 18

Describe how the decision to invest in stocks affects financial planning,liquidity management,financing,and protecting your wealth.

Accepted Answer

Stocks are part of the investment plan a

Question 19

Use the following two columns of items to answer the matching questions below:
-secondary market

Accepted Answer

A) first offering of a firm's stock to the public 
B) financial instruments that represent partial ownership of a firm 
C) investors owning this type of stock have priority over common stockholders in receiving dividends 
D) individual investors who buy and sell stocks within a day 
E) market where existing securities are sold
F)professionals responsible for clients' funds
G)facilities that allow investors to purchase or sell existing stocks
H)debt instruments issued by the government or corporations to borrow money from investors 
A) first offering of a firm's stock to the public 
B) financial instruments that represent partial ownership of a firm 
C) investors owning this type of stock have priority over common stockholders in receiving dividends 
D) individual investors who buy and sell stocks within a day 
E) market where existing securities are sold
F)professionals responsible for clients' funds
G)facilities that allow investors to purchase or sell existing stocks
H)debt instruments issued by the government or corporations to borrow money from investors

Question 20

Money you set aside for a "rainy day fund" should be invested in ________,while money you are saving for retirement in 20 years should be invested in ________.

Accepted Answer

A)  mutual funds; bond funds 
B)  money market funds; growth oriented stock mutual funds 
C)  three year bank CD's; 20 year bank CD's 
D)  preferred stock; common stock 
A)  mutual funds; bond funds 
B)  money market funds; growth oriented stock mutual funds 
C)  three year bank CD's; 20 year bank CD's 
D)  preferred stock; common stock

Exam 14: Investing Fundamentals

Growth stocks are likely to pay high dividends.

Use the following two columns of items to answer the matching questions below: -preferred stock

The main difference(s)between a preferred stock in Company A that pays a $2.50 per share annual dividend and a common stock in Company A that also pays a $2.50 per share current annual dividend is (are)

Regarding dividends paid on common stock,

Stock prices are characterized by all of the following except they

Which of the following are not factors that may impact the return on stock or bond investments?

One difference between common and preferred stock is that preferred stock

What would be the annual compound return on a stock purchased at $20 per share,held for 5 years,and sold for $32.22? Ignore brokerage commissions and tax implications and assume the stock paid no dividends during the holding period.Round to the nearest whole percent if necessary.

You can reduce your risk by

Individual risk is

Corporate bonds

One of the factors impacting the risks of investments is the time period you have available to keep your money invested.

What would be the market price of a stock that paid a constant $2.00 per year in dividends in perpetuity,if the expected market return for a risk of this type was 7.5%?

Newly issued securities are traded in the ________.

If you bought stock for $3,000 a year ago,received no dividends,and sold it for $1,000,what is the return on your investment?

What return on investment would you earn if you bought a stock on 1/1/16 for $100,received a 1% per quarter dividend and sold the stock on 1/2/2017 for $107?

Which of the following is not true regarding preferred stock?

Describe how the decision to invest in stocks affects financial planning,liquidity management,financing,and protecting your wealth.

Use the following two columns of items to answer the matching questions below: -secondary market

Money you set aside for a "rainy day fund" should be invested in ________,while money you are saving for retirement in 20 years should be invested in ________.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Money you set aside for a "rainy day fund" should be invested in ,while money you are saving for retirement in 20 years should be invested in .