Question 1

Market risk is often measured using

Accepted Answer

A) the price/earnings ratio. 
B) the dividend yield. 
C) alpha. 
D) beta. 
E) none of these. 
A) the price/earnings ratio. 
B) the dividend yield. 
C) alpha. 
D) beta. 
E) none of these.

Question 2

Stocks of companies that have experienced-and are expected to continue experiencing-higher rates of growth in operations and earnings are called

Accepted Answer

A) blue-chip stock. 
B) growth stock. 
C) income stock. 
D) speculative stock. 
E) defensive stock. 
A) blue-chip stock. 
B) growth stock. 
C) income stock. 
D) speculative stock. 
E) defensive stock.

Question 3

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-Dividend income is taxed [as ordinary income | at capital gains rates].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 4

Event risk occurs when something substantial happens to a company that has an immediate impact on its financial condition.

Accepted Answer

A) True 
 B)False

Question 5

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-Common stockholders will receive their share of company earnings [before | after] preferred dividends are paid.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 6

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-Common stockholders will receive their share of company earnings [before | after] bond interest is paid.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 7

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-Zero coupon bonds would be more appropriate for a [tax-deferred retirement account | taxable account].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 8

The best returns in the stock market will be achieved by

Accepted Answer

A) remaining fully invested. 
B) missing the five best months. 
C) missing the ten best months. 
D) missing the fifteen best months. 
E) missing the twenty best months. 
A) remaining fully invested. 
B) missing the five best months. 
C) missing the ten best months. 
D) missing the fifteen best months. 
E) missing the twenty best months.

Question 9

A bond is priced at 89 8/32. What is its price?

Accepted Answer

A) $89.25 
B) $890.25 
C) $898.32 
D) $646.50 
E) $892.50 
A) $89.25 
B) $890.25 
C) $898.32 
D) $646.50 
E) $892.50

Question 10

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-The yields on municipal bonds are usually [lower | higher] than the returns available from fully taxable issues.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 11

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-By holding stock in 5 companies,you are reducing [market | business] risk.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 12

Bonds provide for investment return primarily in the form of growth.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

You have the chance to buy one of two bonds.The first is a municipal bond with a coupon yield of 6.5%.The second is a corporate bond with a yield of 8.5%.Both bonds are rated AA.Your tax rate is 28%.Which should you choose? (Show all work.)

Accepted Answer

Yield on corporate bond = 8.5%

Question 15

A discount bond has a market value above par value.

Accepted Answer

A) True 
 B)False

Question 16

Interest on corporate bonds is paid semiannually.

Accepted Answer

A) True 
 B)False

Question 17

Suppose the EPS of Walmart stock is $2,and the current price per earnings ratio is 10.What is the current price of Walmart stock?

Accepted Answer

A) $5 
B) $8 
C) $20 
D) $40 
E) Cannot compute with given information. 
A) $5 
B) $8 
C) $20 
D) $40 
E) Cannot compute with given information.

Question 18

All securities involve risk of some kind.

Accepted Answer

A) True 
 B)False

Question 19

A high inflation rate would result in a high degree of

Accepted Answer

A) business risk. 
B) financial risk. 
C) market risk. 
D) purchasing power risk. 
E) interest rate risk. 
A) business risk. 
B) financial risk. 
C) market risk. 
D) purchasing power risk. 
E) interest rate risk.

Question 20

Security investors incur varying degrees of risk.Business risk is related to

Accepted Answer

A) price level changes in the economy. 
B) investor behavior in the market. 
C) the debt-to-equity ratio of the firm. 
D) the potential success or failure of the firm. 
E) security price fluctuations. 
A) price level changes in the economy. 
B) investor behavior in the market. 
C) the debt-to-equity ratio of the firm. 
D) the potential success or failure of the firm. 
E) security price fluctuations.

Market risk is often measured using

Stocks of companies that have experienced-and are expected to continue experiencing-higher rates of growth in operations and earnings are called

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Dividend income is taxed [as ordinary income | at capital gains rates].

Event risk occurs when something substantial happens to a company that has an immediate impact on its financial condition.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Common stockholders will receive their share of company earnings [before | after] bond interest is paid.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Zero coupon bonds would be more appropriate for a [tax-deferred retirement account | taxable account].

The best returns in the stock market will be achieved by

A bond is priced at 89 8/32. What is its price?

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -By holding stock in 5 companies,you are reducing [market | business] risk.

Bonds provide for investment return primarily in the form of growth.

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

You have the chance to buy one of two bonds.The first is a municipal bond with a coupon yield of 6.5%.The second is a corporate bond with a yield of 8.5%.Both bonds are rated AA.Your tax rate is 28%.Which should you choose? (Show all work.)

A discount bond has a market value above par value.

Interest on corporate bonds is paid semiannually.

Suppose the EPS of Walmart stock is $2,and the current price per earnings ratio is 10.What is the current price of Walmart stock?

All securities involve risk of some kind.

A high inflation rate would result in a high degree of

Security investors incur varying degrees of risk.Business risk is related to

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

Market risk is often measured using

Stocks of companies that have experienced-and are expected to continue experiencing-higher rates of growth in operations and earnings are called

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Dividend income is taxed [as ordinary income | at capital gains rates].

Event risk occurs when something substantial happens to a company that has an immediate impact on its financial condition.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Common stockholders will receive their share of company earnings [before | after] bond interest is paid.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Zero coupon bonds would be more appropriate for a [tax-deferred retirement account | taxable account].

The best returns in the stock market will be achieved by

A bond is priced at 89 8/32. What is its price?

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -By holding stock in 5 companies,you are reducing [market | business] risk.

Bonds provide for investment return primarily in the form of growth.

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

You have the chance to buy one of two bonds.The first is a municipal bond with a coupon yield of 6.5%.The second is a corporate bond with a yield of 8.5%.Both bonds are rated AA.Your tax rate is 28%.Which should you choose? (Show all work.)

A discount bond has a market value above par value.

Interest on corporate bonds is paid semiannually.

Suppose the EPS of Walmart stock is $2,and the current price per earnings ratio is 10.What is the current price of Walmart stock?

All securities involve risk of some kind.

A high inflation rate would result in a high degree of

Security investors incur varying degrees of risk.Business risk is related to

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