Exam 12: Investing in Stocks

You are considering purchasing one of two stocks.Stock A is expected to pay a $2.50 dividend,and has historically grown at 6%.Stock B is expected to pay a $3.00 dividend and has historically grown at 4%.Both are the same risk,and you desire to earn a 16% return.Which of the following is true?

Compared to other investment options,we can safely say that investing in stocks

The ________ is a common stock indicator,consisting of 30 large industrial firms,and is used to indicate how well stocks have done.

Every company must pay dividends as a portion of the company's profits to its stockholders.

Publicly traded stocks listed on a major exchange are not very liquid investments.

Nathan noticed that a company that has great potential just declared a ________ because its stock price was getting too high for the small investor to buy the stock.The company will substitute more shares for the existing shares of stock without increasing the market value of the firm.

The ________ the firm's earnings growth rate,the ________ the firm's P/E ratio and the ________ the investor's required rate of return,the ________ the P/E ratio.

In the event of a corporate bankruptcy,bondholder's claims are paid before shareholders' claims are paid.

Briefly describe the SWOT analysis.

You and a group of your friends have been discussing your portfolios at the company water cooler.Your discussion has centered on how your stocks are moving up or down in price relative to the market as a whole.Each stock's ________ is likely the best measure of the relationship.

When you got home after work,you saw on the news that the S&P was down by 20 points.Which of the following is true?

Common stockholders have a superior claim on a company's assets over creditors and bondholders.

The ________ is the date on which the board of directors announces the amount of the dividend.

The price per share divided by the earnings per share is

If you are very optimistic about the ability of firms to earn profits today and in the immediate future,what type of investor philosophy do you exhibit?

The dividend yield is calculated by dividing the earnings per share by the market price of the stock.

For an investor who is retired,which category of stocks would be more appropriate for a portion of their portfolio?

How do the three common investment strategies differ? Which is good if you want to avoid being killed rather than make a killing in the market?

The S&P 500 is a much broader index than the Dow.

The term "bear" stems from the fact that bears raise their paws upward when they attack.