Question 1

Acme Widget, Inc. has 1,000 shareholders who own a total of one million shares of its common stock. The stock currently sells for $85 per share. The company earned $5 million after taxes. The annual dividend is $0.50 per share. The firm has assets of $125 million and liabilities of $25 million. What is the P-E ratio?

Accepted Answer

A)   10
B)   11
C)   13
D)   17
E)   20F) A) and E)
G) A) and C)

Question 2

Orlando Blodgett is buying stock in the Getaway Caribbean Cruise Company today. He had thought about buying the stock yesterday and if he had, he would have received this quarter's dividend. However, since he waited until today, he will not receive that dividend payment. Given this information, which one of the following dates applies to this stock today?

Accepted Answer

A)   Record date
B)   Ex-dividend date
C)   Payment date
D)   Stock split date
E)   Stock repurchase dateF) B) and E)
G) C) and E)

Question 3

George Clancy wants to diversify his portfolio by adding a stock that has a value which moves in direct relation to the business cycle. What type of stock is George thinking about adding to his portfolio?

Accepted Answer

A)   Defensive stock
B)   Cyclical stock
C)   Small-cap stock
D)   Blue-chip stock
E)   Growth stockF) None of the above
G) C) and E)

Question 4

A yield calculation that takes into account the total return, the original investment, and the time that the investment is held is called ____________ yield.

Accepted Answer

A)   current
B)   dividend
C)   annualized holding period
D)   capital gain
E)   original investmentF) A) and C)
G) None of the above

Question 5

The minimum commission charged by most brokerage firms for buying or selling stock is between $5 and $25.

Accepted Answer

A) True 
 B)False

Question 6

Amy Farmer just received a legal form in the mail from a firm in which she owns stock. This form lists the issues to be decided at the annual stockholders' meeting and asks her to give written permission for someone else to vote for her if she cannot attend. What form has she received in the mail?

Accepted Answer

A)   Equity
B)   Proxy
C)   Voting rights
D)   Dividends
E)   Call optionF) B) and E)
G) A) and E)

Question 7

The stock of ABC Company has a current market price of $75. The corporation has paid a dividend of $3.75 over the last 12 months and has earnings per share of $5. What is the dividend yield?

Accepted Answer

A)   0.8 percent
B)   1.3 percent
C)   5.0 percent
D)   6.7 percent
E)   7.5 percentF) All of the above
G) A) and D)

Question 8

The fundamental theory is based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company.

Accepted Answer

A) True 
 B)False

Question 9

The federal government requires that a corporation selling a new issue of securities must disclose information about the company and its finances in a(n) :

Accepted Answer

A)   annual report.
B)   quarterly report.
C)   accountant's audit report.
D)   prospectus.
E)   stock guide.F) A) and B)
G) B) and E)

Question 10

The book value for a share of stock is determined by deducting all liabilities from the corporation's assets and dividing the remainder by the number of outstanding shares of common stock.

Accepted Answer

A) True 
 B)False

Question 11

Acme Widget, Inc. has one million shares of common stock outstanding at a price per share of $85. The company earned $5 million after taxes. The annual dividend is $3.50 per share. The firm has assets of $125,000,000 and liabilities of $25,000,000. What is the dividend yield?

Accepted Answer

A)   3.50 percent
B)   1.43 percent
C)   5.00 percent
D)   4.12 percent
E)   3.44 percentF) B) and E)
G) None of the above

Question 12

Lindsey Holt owns stock in the Galloway Gems Company. She knows she will receive a $1.50 dividend each quarter. Given this, you know for sure that she purchased which type of stock?

Accepted Answer

A)   Preferred
B)   Common
C)   Blue chip
D)   Growth
E)   PennyF) B) and E)
G) D) and E)

Question 13

Approximately ____ percent of people under 35 years old own stocks.

Accepted Answer

A)   5
B)   16
C)   39
D)   51
E)   73F) A) and B)
G) A) and E)

Question 14

A cyclical stock is a stock that follows the business cycle of advances and declines in the economy.

Accepted Answer

A) True 
 B)False

Question 15

The P-E ratio is the price of a share of stock divided by the corporation's earnings per share.

Accepted Answer

A) True 
 B)False

Question 16

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Accepted Answer

A)   a direct investment plan.
B)   a dividend reinvestment plan.
C)   dollar cost averaging.
D)   buy-and-hold.
E)   day trading.F) A) and B)
G) A) and D)

Question 17

On May 20, 2010, Tony Blackman bought 100 shares of stock from XYZ Corporation. The quarterly dividend is $1.25 per share and the record date is May 25. How much will Tony receive for this quarterly dividend?

Accepted Answer

A)   $0.00
B)   $1.25
C)   $12.50
D)   $125.00
E)   $0.13F) A) and C)
G) B) and D)

Question 18

Most speculators use a buy and hold technique.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following statements is true?

Accepted Answer

A)   Board members are appointed by a company's CEO.
B)   Stockholders do not pay taxes on stock dividends.
C)   Intelligent investors should be concerned about future after-tax corporate profits when investing.
D)   If a cash dividend is declared by the board of directors, each stockholder will receive a different dollar amount depending on the length of time they have owned their shares.
E)   Corporate dividends are always paid in cash.F) A) and E)
G) A) and B)

Question 20

The dividend yield for a stock investment is calculated by dividing the annual dividend by the stock's current market value.

Accepted Answer

A) True 
 B)False

Exam 14: Investing in Stocks

The book value for a share of stock is determined by deducting all liabilities from the corporation's assets and dividing the remainder by the number of outstanding shares of common stock.

Correct Answer
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Correct Answer
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Amy Farmer just received a legal form in the mail from a firm in which she owns stock. This form lists the issues to be decided at the annual stockholders' meeting and asks her to give written permission for someone else to vote for her if she cannot attend. What form has she received in the mail?

Correct Answer
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A yield calculation that takes into account the total return, the original investment, and the time that the investment is held is called ____________ yield.

Correct Answer
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Which one of the following statements is true?

Correct Answer
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The stock of ABC Company has a current market price of $75. The corporation has paid a dividend of $3.75 over the last 12 months and has earnings per share of $5. What is the dividend yield?

Correct Answer
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George Clancy wants to diversify his portfolio by adding a stock that has a value which moves in direct relation to the business cycle. What type of stock is George thinking about adding to his portfolio?

Correct Answer
verified

On May 20, 2010, Tony Blackman bought 100 shares of stock from XYZ Corporation. The quarterly dividend is $1.25 per share and the record date is May 25. How much will Tony receive for this quarterly dividend?

Correct Answer
verified

The fundamental theory is based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company.

Correct Answer
verified

Approximately ____ percent of people under 35 years old own stocks.

Correct Answer
verified

Acme Widget, Inc. has one million shares of common stock outstanding at a price per share of $85. The company earned $5 million after taxes. The annual dividend is $3.50 per share. The firm has assets of $125,000,000 and liabilities of $25,000,000. What is the dividend yield?

Correct Answer
verified

The dividend yield for a stock investment is calculated by dividing the annual dividend by the stock's current market value.

Correct Answer
verified

The minimum commission charged by most brokerage firms for buying or selling stock is between $5 and $25.

Correct Answer
verified

Most speculators use a buy and hold technique.

Correct Answer
verified

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Correct Answer
verified

Lindsey Holt owns stock in the Galloway Gems Company. She knows she will receive a $1.50 dividend each quarter. Given this, you know for sure that she purchased which type of stock?

Correct Answer
verified

The P-E ratio is the price of a share of stock divided by the corporation's earnings per share.

Correct Answer
verified

The federal government requires that a corporation selling a new issue of securities must disclose information about the company and its finances in a(n) :

Correct Answer
verified

Correct Answer
verified

A cyclical stock is a stock that follows the business cycle of advances and declines in the economy.

Correct Answer
verified

Exam 14: Investing in Stocks

The book value for a share of stock is determined by deducting all liabilities from the corporation's assets and dividing the remainder by the number of outstanding shares of common stock.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Amy Farmer just received a legal form in the mail from a firm in which she owns stock. This form lists the issues to be decided at the annual stockholders' meeting and asks her to give written permission for someone else to vote for her if she cannot attend. What form has she received in the mail?

Correct AnswerverifiedShow Answer

A yield calculation that takes into account the total return, the original investment, and the time that the investment is held is called ____________ yield.

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

The stock of ABC Company has a current market price of $75. The corporation has paid a dividend of $3.75 over the last 12 months and has earnings per share of $5. What is the dividend yield?

Correct AnswerverifiedShow Answer

George Clancy wants to diversify his portfolio by adding a stock that has a value which moves in direct relation to the business cycle. What type of stock is George thinking about adding to his portfolio?

Correct AnswerverifiedShow Answer

On May 20, 2010, Tony Blackman bought 100 shares of stock from XYZ Corporation. The quarterly dividend is $1.25 per share and the record date is May 25. How much will Tony receive for this quarterly dividend?

Correct AnswerverifiedShow Answer

The fundamental theory is based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company.

Correct AnswerverifiedShow Answer

Approximately ____ percent of people under 35 years old own stocks.

Correct AnswerverifiedShow Answer

Acme Widget, Inc. has one million shares of common stock outstanding at a price per share of $85. The company earned $5 million after taxes. The annual dividend is $3.50 per share. The firm has assets of $125,000,000 and liabilities of $25,000,000. What is the dividend yield?

Correct AnswerverifiedShow Answer

The dividend yield for a stock investment is calculated by dividing the annual dividend by the stock's current market value.

Correct AnswerverifiedShow Answer

The minimum commission charged by most brokerage firms for buying or selling stock is between $5 and $25.

Correct AnswerverifiedShow Answer

Most speculators use a buy and hold technique.

Correct AnswerverifiedShow Answer

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Correct AnswerverifiedShow Answer

Lindsey Holt owns stock in the Galloway Gems Company. She knows she will receive a $1.50 dividend each quarter. Given this, you know for sure that she purchased which type of stock?

Correct AnswerverifiedShow Answer

The P-E ratio is the price of a share of stock divided by the corporation's earnings per share.

Correct AnswerverifiedShow Answer

The federal government requires that a corporation selling a new issue of securities must disclose information about the company and its finances in a(n) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A cyclical stock is a stock that follows the business cycle of advances and declines in the economy.

Correct AnswerverifiedShow Answer

Correct Answer
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