Question 1

Figure 13.1 in your textbook compares the returns on various investments over the period 1951-2010.Which of the following is shown to exceed the inflation rate by the widest margin?

Accepted Answer

A)  Common stocks 
B)  Government bonds 
C)  Treasury bills 
D)  Mutual funds

Question 2

Greg Jewell read about several companies that were performing relatively well despite the current recession.Stocks like these,that in some cases actually perform better during downturns in the economy,are called ________ stocks.

Accepted Answer

A)  cyclical 
B)  speculative 
C)  defensive 
D)  growth 
E)  seasonal

Question 3

The acronym DRIP stands for

Accepted Answer

A)  Dividends, Returns, Interest, and Profits. 
B)  Dividend Rates and Income Potential. 
C)  Dividend Reinvestment Plan. 
D)  Dividend Risk and Income Potential.

Question 4

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

Question 5

During a "bear market" stocks prices typically fall.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following makes common stocks more risky than corporate bonds when both are issued by the same company?

Accepted Answer

A)  Claims on income 
B)  Unlimited liability 
C)  Claims on assets 
D)  All of the above are correct. 
E)  Only A and C are correct.

Question 7

Discuss four reasons to invest in stocks.

Accepted Answer

The answer of Discuss four reasons to invest in stocks....

Question 8

Income stocks are stocks that have a very high capital appreciation potential.

Accepted Answer

A) True 
 B)False

Question 9

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.

Question 10

Some companies distribute earnings per share in the form of dividends and some retain these earnings for future investment in the firm.

Accepted Answer

A) True 
 B)False

Question 11

When a corporation repurchases its own stock,it does so in the secondary markets.

Accepted Answer

A) True 
 B)False

Question 12

When the economy slumps,the earnings of cyclical stocks drop;when the economy recovers,so do their earnings.

Accepted Answer

A) True 
 B)False

Question 13

Holding several types of stock can greatly reduce the risk in your portfolio.

Accepted Answer

A) True 
 B)False

Question 14

What factors can effect the market price of a stock?

Accepted Answer

The answer of What factors can effect the market price...

Question 15

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?

Accepted Answer

A)  All of your stocks' market prices must have declined by 20 points. 
B)  Some of your stocks' market prices may have increased. 
C)  Some of your stocks' market prices may have decreased. 
D)  Both B and C are correct.

Question 16

If you were to purchase common stocks issued by large,nationally known companies with sound financial histories with solid dividend and growth records you would own what are called

Accepted Answer

A)  best-bet stocks. 
B)  blue-chip stocks. 
C)  performance stocks. 
D)  long-run performance stocks. 
E)  none of the above.

Question 17

Both capital gains and dividends are guaranteed with common stock.

Accepted Answer

A) True 
 B)False

Question 18

Brenda is a 25 year old investor who recently graduated from college and has a successful career,which type of stock should represent a good portion of her portfolio?

Accepted Answer

A)  Growth stocks 
B)  Defensive stocks 
C)  Income stocks 
D)  Risk-free stocks

Question 19

Briefly describe the SWOT analysis.

Accepted Answer

The answer of Briefly describe the SWOT analysis....

Question 20

Which of the following investment options is not affected by a change in the market rates of interest?

Accepted Answer

A)  Common stocks 
B)  Corporate bonds 
C)  Government bonds 
D)  None of the above is correct; all are affected.

Exam 12: Investing in Stocks

Figure 13.1 in your textbook compares the returns on various investments over the period 1951-2010.Which of the following is shown to exceed the inflation rate by the widest margin?

Greg Jewell read about several companies that were performing relatively well despite the current recession.Stocks like these,that in some cases actually perform better during downturns in the economy,are called ________ stocks.

The acronym DRIP stands for

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?

During a "bear market" stocks prices typically fall.

Which of the following makes common stocks more risky than corporate bonds when both are issued by the same company?

Discuss four reasons to invest in stocks.

Income stocks are stocks that have a very high capital appreciation potential.

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

Some companies distribute earnings per share in the form of dividends and some retain these earnings for future investment in the firm.

When a corporation repurchases its own stock,it does so in the secondary markets.

When the economy slumps,the earnings of cyclical stocks drop;when the economy recovers,so do their earnings.

Holding several types of stock can greatly reduce the risk in your portfolio.

What factors can effect the market price of a stock?

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?

If you were to purchase common stocks issued by large,nationally known companies with sound financial histories with solid dividend and growth records you would own what are called

Both capital gains and dividends are guaranteed with common stock.

Brenda is a 25 year old investor who recently graduated from college and has a successful career,which type of stock should represent a good portion of her portfolio?

Briefly describe the SWOT analysis.

Which of the following investment options is not affected by a change in the market rates of interest?