Question 1

A P/E ratio measures how much investors are willing to pay for

Accepted Answer

A) $1 of the company's revenue. 
B) the price of the stock. 
C) $1 of the company's earnings. 
D) the sales of the company. 
A) $1 of the company's revenue. 
B) the price of the stock. 
C) $1 of the company's earnings. 
D) the sales of the company.

Question 2

Defensive stocks frequently perform better during economic downturns.

Accepted Answer

A) True 
 B)False

Question 3

The phrase ________ is sadly appropriate for the actions of some people,as they perceive that investment success rests in making frequent transactions.

Accepted Answer

A) "playing the market" 
B) "timing the market" 
C) "go big or lose your home" 
D) "buy low,sell high" 
A) "playing the market" 
B) "timing the market" 
C) "go big or lose your home" 
D) "buy low,sell high"

Question 4

Beta measure risk by comparing the returns of an individual stock to the returns of

Accepted Answer

A) competitors. 
B) DJIA. 
C) S&P 500. 
D) treasury bills. 
A) competitors. 
B) DJIA. 
C) S&P 500. 
D) treasury bills.

Question 5

This equation,dividends next year/required rate of return minus growth rate tells us the stock's

Accepted Answer

A) dividend yield. 
B) earnings per share. 
C) value. 
D) growth potential. 
E) book-to-price ratio. 
A) dividend yield. 
B) earnings per share. 
C) value. 
D) growth potential. 
E) book-to-price ratio.

Question 6

What are proxy fights?

Accepted Answer

A) Proxy fights are when two rival companies want the same voters. 
B) Proxy fights are battles for proxy votes between rival groups of share holders in separate companies. 
C) Proxy fights are battles for proxy votes between rival groups of share holders in the same company. 
D) Proxy fights are when shareholders fight over who will cast their votes. 
E) There is no such thing as a proxy fight. 
A) Proxy fights are when two rival companies want the same voters. 
B) Proxy fights are battles for proxy votes between rival groups of share holders in separate companies. 
C) Proxy fights are battles for proxy votes between rival groups of share holders in the same company. 
D) Proxy fights are when shareholders fight over who will cast their votes. 
E) There is no such thing as a proxy fight.

Question 7

Suppose that a company feels that the price of its stock is more than the average small investor can afford.To lower the price the company could engage in a

Accepted Answer

A) stock split. 
B) stock repurchase. 
C) proxy vote. 
D) All of the above are correct. 
A) stock split. 
B) stock repurchase. 
C) proxy vote. 
D) All of the above are correct.

Question 8

Dividends are paid regardless if the company makes a profit.

Accepted Answer

A) True 
 B)False

Question 9

Because of her children's immediate financial needs,your aunt Marsha has decided to switch some of her money to high-grade utility company stocks.Her reasoning is that these ________ stocks generally pay relatively high dividends that she will be able to give to her children as they need assistance.

Accepted Answer

A) growth 
B) blue-chip 
C) income 
D) cyclical 
E) safe 
A) growth 
B) blue-chip 
C) income 
D) cyclical 
E) safe

Question 10

Which feature of common stock ownership allows a stockholder to share in the company's earnings after the creditors are paid?

Accepted Answer

A) Limited liability 
B) Claim on income 
C) Claims on assets 
D) Voting rights 
A) Limited liability 
B) Claim on income 
C) Claims on assets 
D) Voting rights

Question 11

If your stock's beta was greater than 1.0 that indicates that your stock is more susceptible to movements in the market.

Accepted Answer

A) True 
 B)False

Question 12

You have just purchased 10 shares of a stock selling at $50 per share.Since that time,the company was found to be in violation of several environmental laws and has several major lawsuits outstanding.Which of the following statements is most correct?

Accepted Answer

A) You could lose up to your $500 investment. 
B) You could lose more than your $500 investment. 
C) You cannot lose your investment based on the actions of the company. 
D) By owning stock in the company,you have also technically violated the law. 
E) None of the above 
A) You could lose up to your $500 investment. 
B) You could lose more than your $500 investment. 
C) You cannot lose your investment based on the actions of the company. 
D) By owning stock in the company,you have also technically violated the law. 
E) None of the above

Question 13

What are the four basic investment questions a potential investor should answer before investing?

Accepted Answer

Value: Is this a good price for the stoc

Question 14

In October 2008,most of the major stock indices around the world plummeted in value.The most likely cause for these dramatic events were

Accepted Answer

A) non-systematic risk. 
B) variable betas. 
C) systematic risk. 
D) None of the above are correct. 
A) non-systematic risk. 
B) variable betas. 
C) systematic risk. 
D) None of the above are correct.

Question 15

Returns on stocks can come in the form of capital appreciation.

Accepted Answer

A) True 
 B)False

Question 16

Which one of the popular common stock valuation methods focuses on supply and demand and uses a computer and charts to identify and project price trends for a stock or for the market as a whole?

Accepted Answer

A) Fundamental analysis approach 
B) Technical analysis approach 
C) Price/earnings ratio approach 
D) Market analysis approach 
E) Industry analysis approach 
A) Fundamental analysis approach 
B) Technical analysis approach 
C) Price/earnings ratio approach 
D) Market analysis approach 
E) Industry analysis approach

Question 17

Using the stock valuation formula calculate the value of a share of stock if it is expected to pay $15 in dividends,in addition the dividends are expected to grow at a rate of 8 percent forever,and the investor's required rate of return is 10 percent.

Accepted Answer

A) $6.50 
B) $750 
C) $12.00 
D) $14.50 
A) $6.50 
B) $750 
C) $12.00 
D) $14.50

Question 18

According to your text,there is very little validation in using technical analysis as an investing tool.

Accepted Answer

A) True 
 B)False

Question 19

Abby previously owned 200 shares of NEWAGE stock at $25 per share.Today the company split the stock in a 3:1 split.Now what is the value of Abby's stock?

Accepted Answer

A) $5,000 
B) $6,000 
C) $2,500 
D) $200 
A) $5,000 
B) $6,000 
C) $2,500 
D) $200

Question 20

Discuss the concept of using beta for investing in stocks.

Accepted Answer

Beta is a mathematical process to quanti

A P/E ratio measures how much investors are willing to pay for

Defensive stocks frequently perform better during economic downturns.

The phrase ________ is sadly appropriate for the actions of some people,as they perceive that investment success rests in making frequent transactions.

Beta measure risk by comparing the returns of an individual stock to the returns of

This equation,dividends next year/required rate of return minus growth rate tells us the stock's

What are proxy fights?

Suppose that a company feels that the price of its stock is more than the average small investor can afford.To lower the price the company could engage in a

Dividends are paid regardless if the company makes a profit.

Because of her children's immediate financial needs,your aunt Marsha has decided to switch some of her money to high-grade utility company stocks.Her reasoning is that these ________ stocks generally pay relatively high dividends that she will be able to give to her children as they need assistance.

Which feature of common stock ownership allows a stockholder to share in the company's earnings after the creditors are paid?

If your stock's beta was greater than 1.0 that indicates that your stock is more susceptible to movements in the market.

You have just purchased 10 shares of a stock selling at $50 per share.Since that time,the company was found to be in violation of several environmental laws and has several major lawsuits outstanding.Which of the following statements is most correct?

What are the four basic investment questions a potential investor should answer before investing?

In October 2008,most of the major stock indices around the world plummeted in value.The most likely cause for these dramatic events were

Returns on stocks can come in the form of capital appreciation.

Which one of the popular common stock valuation methods focuses on supply and demand and uses a computer and charts to identify and project price trends for a stock or for the market as a whole?

Using the stock valuation formula calculate the value of a share of stock if it is expected to pay $15 in dividends,in addition the dividends are expected to grow at a rate of 8 percent forever,and the investor's required rate of return is 10 percent.

According to your text,there is very little validation in using technical analysis as an investing tool.

Abby previously owned 200 shares of NEWAGE stock at $25 per share.Today the company split the stock in a 3:1 split.Now what is the value of Abby's stock?

Discuss the concept of using beta for investing in stocks.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

Exam 12: Investing in Stocks

A P/E ratio measures how much investors are willing to pay for

Defensive stocks frequently perform better during economic downturns.

The phrase ________ is sadly appropriate for the actions of some people,as they perceive that investment success rests in making frequent transactions.

Beta measure risk by comparing the returns of an individual stock to the returns of

This equation,dividends next year/required rate of return minus growth rate tells us the stock's

What are proxy fights?

Suppose that a company feels that the price of its stock is more than the average small investor can afford.To lower the price the company could engage in a

Dividends are paid regardless if the company makes a profit.

Which feature of common stock ownership allows a stockholder to share in the company's earnings after the creditors are paid?

If your stock's beta was greater than 1.0 that indicates that your stock is more susceptible to movements in the market.

You have just purchased 10 shares of a stock selling at $50 per share.Since that time,the company was found to be in violation of several environmental laws and has several major lawsuits outstanding.Which of the following statements is most correct?

What are the four basic investment questions a potential investor should answer before investing?

In October 2008,most of the major stock indices around the world plummeted in value.The most likely cause for these dramatic events were

Returns on stocks can come in the form of capital appreciation.

Which one of the popular common stock valuation methods focuses on supply and demand and uses a computer and charts to identify and project price trends for a stock or for the market as a whole?

Using the stock valuation formula calculate the value of a share of stock if it is expected to pay $15 in dividends,in addition the dividends are expected to grow at a rate of 8 percent forever,and the investor's required rate of return is 10 percent.

According to your text,there is very little validation in using technical analysis as an investing tool.

Abby previously owned 200 shares of NEWAGE stock at $25 per share.Today the company split the stock in a 3:1 split.Now what is the value of Abby's stock?

Discuss the concept of using beta for investing in stocks.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters