Exam 12: Investing in Stocks and Bonds

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. -More conservative investors would prefer stocks with [higher | lower] betas.

Investors typically welcome their bonds being called because of the generous call premium 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. -Preferred stockholders will receive their share of company earnings [before | after] bond interest is paid.

Stocks whose price movements tend to follow the business cycle 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. -Annual interest income divided by market price of the bond equals [current yield | yield to maturity].

Anderson,Inc.has $10 million liabilities,$12 million preferred stock,8 million shares of common stock outstanding,and $45 million in total assets.The book value is:

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:

Advantages of a dividend reinvestment plan can include:

Blue-chip stocks are expected to pay dividends more regularly than growth stocks.

An investor is guaranteed to make a positive return on Treasury notes and bonds.

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 usually receive one vote per [person | share].

All treasury bonds issued today are inflation-adjusted.

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. -One should look for companies with steadily [increasing | decreasing] book value per share.

A bond with a S&P rating of BBB is considered investment-grade.

Changes in the value of securities due to social,political,or economic factors are referred to as market risk.

Calculate the approximate yield on the common stock of Bowl Game that Matty Smelt has owned for 4 years.She bought it for $10 per share and sold it for $25.The dividend was $1.50 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. -[Market | Business] risk results from the behavior of investors that may cause security prices to fluctuate.

Treasury notes,bills,and bonds represent loans to the federal government.

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.

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. -Treasury securities are yielding 6%.A growth stock with an expected return of 6% [would | would not] be considered a viable investment candidate by most investors.