Question 1

A stock that remains stable during declines in the economy is called a(n)  ____________ stock.

Accepted Answer

A)   defensive
B)   cyclical
C)   growth
D)   income
E)   blue-chipF) A) and D)
G) B) and E)

Question 2

Devin Scott is looking for an investment that will provide a predictable source of income. With this goal in mind, which of the following industry groups would normally be classified as an industry to invest in for income?

Accepted Answer

A)   public utilities
B)   electronics
C)   automobile manufacturing
D)   steel manufacturing
E)   paper manufacturingF) A) and D)
G) A) and C)

Question 3

A private corporation is a corporation whose stock is owned by relatively few people and is not traded openly in the stock market.

Accepted Answer

A) True 
 B)False

Question 4

Typically, growth companies pay out ____________ of their earnings in dividends to their stockholders.

Accepted Answer

A)   over 95 percent
B)   between 65 percent and 75 percent
C)   between 50 and 65 percent
D)   between 30 and 50 percent
E)   less than 30 percentF) D) and E)
G) A) and B)

Question 5

A small-cap stock is a stock issued by a company that has capitalization of $150 million or less.

Accepted Answer

A) True 
 B)False

Question 6

Describe the steps involved in a typical margin transaction.

Accepted Answer

You may want to compare the st...

Question 7

Cumulative preferred stocks are stocks with unpaid dividends that accumulate and must be paid before any cash dividend is paid to the common shareholders.

Accepted Answer

A) True 
 B)False

Question 8

A stock that is issued by a corporation that has a large amount of capitalization is called a(n)  ____________ stock.

Accepted Answer

A)   small-cap
B)   medium-cap
C)   large-cap
D)   unlimited-cap
E)   giant-capF) B) and D)
G) B) and C)

Question 9

A stock split is a procedure in which a stockholder's common stock is exchanged for preferred stock.

Accepted Answer

A) True 
 B)False

Question 10

Last year, Hi-Lo Electronics earned $2.50 per share. If the current market value for a share of stock is $55, what is the firm's PE ratio?

Accepted Answer

A)   0.025
B)   2.5
C)   22
D)   55
E)   It is impossible to calculate a PE ratio with this information.F) C) and D)
G) All of the above

Question 11

The type of stock in which stockholders are assured that omitted dividends will be paid to them before other dividends are paid is ____________ stock.

Accepted Answer

A)   cumulative preferred
B)   convertible preferred
C)   participating preferred
D)   common
E)   callable preferredF) A) and D)
G) C) and D)

Question 12

Jamie Presner purchased 100 shares of Bank of Montreal for $86.00 Jamie also paid $50 commission. What was the total purchase price for this transaction?

Accepted Answer

A)   $50.00
B)   $86.00
C)   $8,650.00
D)   $8,289.50
E)   $860.00F) C) and D)
G) B) and C)

Question 13

Preferred stocks are often referred to as "middle" investments.

Accepted Answer

A) True 
 B)False

Question 14

Capitalization is ___________

Accepted Answer

A)   issued by a company that has a capitalization of $150 million or less.
B)   issued by a corporation that has the potential to earn profits above the average profits of all firms in the economy.
C)   the total amount of securities-stocks and bonds-issued by a corporation.
D)   follows the business cycle of advances and declines in the economy.
E)   A safe investment that generally attracts conservative investorsF) A) and B)
G) B) and E)

Question 15

A market in which an investor purchases financial securities (via an investment bank or other representative from the issuer of those securities is called the ____________ market.

Accepted Answer

A)   technical
B)   fundamental
C)   efficient
D)   secondary
E)   primaryF) B) and E)
G) B) and D)

Question 16

To calculate the annual dividend yield, the annual dividend is divided by the stock's

Accepted Answer

A)   current price.
B)   historical average price.
C)   future price.
D)   beginning-of-year price.
E)   end-of-year price.F) B) and D)
G) B) and E)

Question 17

The term securities encompass a broad range of investments that include stocks, bonds, mutual funds, options, and commodities.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a true statement?

Accepted Answer

A)   A high price-earnings ratio means high projected earnings in the future.
B)   The price-earnings ratio for a corporation must be studied over a period of time.
C)   The price-earnings ratio is based on the company's dividends.
D)   The price-earnings ratio for one firm may be compared to the price-earnings ratio for all firms.
E)   A low price-earnings ratio indicates that a stock may be a good investment and a high price-earnings ratios may indicate that it is a poor investment.F) B) and C)
G) A) and E)

Question 19

Astrid purchased 100 shares of Royal Bank for $76.00/share. Astrid also paid $29 commission. What was the total purchase price for this transaction?

Accepted Answer

A)   $29.00
B)   $76.00
C)   $7,600
D)   $7,629
E)   $7,571F) A) and E)
G) A) and D)

Question 20

A proxy is a legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individual or individuals.

Accepted Answer

A) True 
 B)False

Exam 11: Investing in Stocks

A proxy is a legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individual or individuals.

Correct AnswerverifiedShow Answer

A market in which an investor purchases financial securities (via an investment bank or other representative from the issuer of those securities is called the ____________ market.

Correct AnswerverifiedShow Answer

To calculate the annual dividend yield, the annual dividend is divided by the stock's

Correct AnswerverifiedShow Answer

A small-cap stock is a stock issued by a company that has capitalization of $150 million or less.

Correct AnswerverifiedShow Answer

The term securities encompass a broad range of investments that include stocks, bonds, mutual funds, options, and commodities.

Correct AnswerverifiedShow Answer

Devin Scott is looking for an investment that will provide a predictable source of income. With this goal in mind, which of the following industry groups would normally be classified as an industry to invest in for income?

Correct AnswerverifiedShow Answer

Jamie Presner purchased 100 shares of Bank of Montreal for $86.00 Jamie also paid $50 commission. What was the total purchase price for this transaction?

Correct AnswerverifiedShow Answer

Describe the steps involved in a typical margin transaction.

Correct AnswerverifiedYou may want to compare the st...View AnswerShow Answer

The type of stock in which stockholders are assured that omitted dividends will be paid to them before other dividends are paid is ____________ stock.

Correct AnswerverifiedShow Answer

Preferred stocks are often referred to as "middle" investments.

Correct AnswerverifiedShow Answer

A stock split is a procedure in which a stockholder's common stock is exchanged for preferred stock.

Correct AnswerverifiedShow Answer

Last year, Hi-Lo Electronics earned $2.50 per share. If the current market value for a share of stock is $55, what is the firm's PE ratio?

Correct AnswerverifiedShow Answer

Which of the following is not a true statement?

Correct AnswerverifiedShow Answer

A stock that remains stable during declines in the economy is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

A private corporation is a corporation whose stock is owned by relatively few people and is not traded openly in the stock market.

Correct AnswerverifiedShow Answer

A stock that is issued by a corporation that has a large amount of capitalization is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

Capitalization is ___________

Correct AnswerverifiedShow Answer

Cumulative preferred stocks are stocks with unpaid dividends that accumulate and must be paid before any cash dividend is paid to the common shareholders.

Correct AnswerverifiedShow Answer

Astrid purchased 100 shares of Royal Bank for $76.00/share. Astrid also paid $29 commission. What was the total purchase price for this transaction?

Correct AnswerverifiedShow Answer

Typically, growth companies pay out ____________ of their earnings in dividends to their stockholders.

Correct AnswerverifiedShow Answer

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You may want to compare the st...
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