Exam 12: Investing in Stocks and Bonds

The relevant sale or invoice price of a bond to the buyer,which adds the accrued interest to the quoted price,is its:

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.

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

Which of the following types of risk affect owners of fixed income securities more than owners of equity securities?

Dividend reinvestment plans should be avoided because of their relatively high cost.

Cash dividends on common stock are most often paid:

Stock dividends are taxed at long-term capital gains rates.

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].

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

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

Monte Jackson is considering the purchase of XYZ stock and would like to estimate its approximate yield if he holds it 5 years.The current price is $20 and Monte expects it would rise to $30 over the 5-year holding period.The expected dividend is $1.00 each year.

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. -Tax on capital gains is paid [as the stock appreciates | in the year the stock is sold].

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. -A growth stock would be expected to pay a [high | low] level of dividends.

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

Stock profitability is often measured by:

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. -For a U.S resident,the best way to minimize exchange rate risk when investing in foreign stocks is to buy [them directly on the foreign exchanges | American Depositary Receipts].

Publicly traded issues are shares only available to qualified investors.

A beta of more than one would be expected of a speculative stock.

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.

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. -Most purchasers of [Treasury | municipal] bonds invest in them because of their tax-free interest.