Question 1

If you own 100 preferred shares that is cumulative and is currently 1 year in arrears, what total amount would you be owed if the company has sufficient funds to pay all dividends.The preferred share has a $4 dividend.

Accepted Answer

A)  $400
B)  $800
C)  $4
D)  $8
E)  $12F) A) and E)
G) A) and C)

Question 2

A bear market develops when investors are optimistic about the overall economy and purchase stocks.

Accepted Answer

A) True 
 B)False

Question 3

A stock that follows the business cycle of advances and declines in the economy is called a(n)  ____________ stock.

Accepted Answer

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The type of stock that may earn more than the stated dividend if the firm has a good year is ____________ stock.

Accepted Answer

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

Question 6

What is the total profit from shares that your purchased for $50 each plus a commission of $12, and then sold the shares for $60 each 2 years later minus a commission of $25.

Accepted Answer

A)  $6
B)  975
C)  $989
D)  $693
E)  $963F) None of the above
G) B) and C) E

Question 7

A defensive stock is a stock that typically sells for less than $l.

Accepted Answer

A) True 
 B)False

Question 8

Anne owns 300 shares of Lily Industries.Suppose that for the last calendar quarter, Lily Industries paid $.30 a share.What is the total amount she received in her dividend cheque for this quarter?

Accepted Answer

A)  0
B)  $.30
C)  $45.00
D)  $90.00
E)  $180.00F) A) and D)
G) All of the above D

Question 9

Which of the following statements is not true?

Accepted Answer

A)  Most board members like to keep stockholders happy.
B)  Few things will unite stockholders into a powerful opposition force more rapidly than omitted or lowered dividends.
C)  Intelligent investors must be concerned about future after-tax profits.
D)  If a cash dividend is declared by the board of directors, each stockholder by law receives an equal amount per share.
E)  Corporate dividends are always paid in cash.F) C) and D)
G) B) and E)

Question 10

When the board of directors approves a two for one stock split, the price for each share of stock

Accepted Answer

A)  remains unchanged.
B)  increases in value.
C)  decreases in value.
D)  is guaranteed to go up within a short period of time.
E)  always drops to half of its former value.F) A) and B)
G) C) and D)

Question 11

When investors purchase stock on margin, they borrow stock from a stockbroker or brokerage firm.

Accepted Answer

A) True 
 B)False

Question 12

A corporation whose stock is owned by relatively few people and is not traded openly in stock markets is called a(n)  ____________ corporation.

Accepted Answer

A)  private
B)  public
C)  equity
D)  debt
E)  preferredF) C) and E)
G) B) and D) A

Question 13

Assume that you purchased 50 shares of Home Depot stock for $35 a share, that you received an annual dividend of $0.30 a share, and that you sold your Home Depot stock for $40 a share at the end of one year.What is the total return for your investment? (Ignore commission amounts for this question.)

Accepted Answer

A)  10.00 percent
B)  12.50 percent
C)  13.25 percent
D)  14.29 percent
E)  15.14 percentF) B) and D)
G) C) and D)

Question 14

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) C) and D)
G) A) and D)

Question 15

A penny stock typically sells for less than $1 a share

Accepted Answer

A) True 
 B)False

Question 16

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 17

If you own 200 preferred shares that is cumulative and is currently 2 years in arrears, what total amount would you be owed if the company has sufficient funds to pay all dividends.The preferred share has a $5 dividend.

Accepted Answer

A)  $500
B)  $1500
C)  $5
D)  $1000
E)  $15F) C) and E)
G) D) and E)

Question 18

What is the total cost when you purchase 100 shares at $44 each and the commission is $11

Accepted Answer

A)  $44
B)  $53
C)  $4400
D)  $4411
E)  $5500F) A) and B)
G) A) and D)

Question 19

Oil-Slick Shipping stock was priced at $70 at the beginning of the year.Over the year the corporation paid a dividend of $3.25 and its stock price at year-end was $65.What is the trailing dividend yield?

Accepted Answer

A)  4.6 percent
B)  4 percent
C)  5 percent
D)  5.4 percent
E)  6 percentF) B) and D)
G) B) and C)

Question 20

What type of stock tends to stay stable during declines in the economy.

Accepted Answer

A)  Blue chip
B)  Growth
C)  Defensive
D)  Large Cap
E)  Small CapF) A) and B)
G) A) and E)

Exam 11: Investing in Stocks

If you own 100 preferred shares that is cumulative and is currently 1 year in arrears, what total amount would you be owed if the company has sufficient funds to pay all dividends.The preferred share has a $4 dividend.

Correct AnswerverifiedShow Answer

A bear market develops when investors are optimistic about the overall economy and purchase stocks.

Correct AnswerverifiedShow Answer

A stock that follows the business cycle of advances and declines in the economy is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The type of stock that may earn more than the stated dividend if the firm has a good year is ____________ stock.

Correct AnswerverifiedShow Answer

What is the total profit from shares that your purchased for $50 each plus a commission of $12, and then sold the shares for $60 each 2 years later minus a commission of $25.

Correct AnswerverifiedE

A defensive stock is a stock that typically sells for less than $l.

Correct AnswerverifiedShow Answer

Anne owns 300 shares of Lily Industries.Suppose that for the last calendar quarter, Lily Industries paid $.30 a share.What is the total amount she received in her dividend cheque for this quarter?

Correct AnswerverifiedD

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

When the board of directors approves a two for one stock split, the price for each share of stock

Correct AnswerverifiedShow Answer

When investors purchase stock on margin, they borrow stock from a stockbroker or brokerage firm.

Correct AnswerverifiedShow Answer

A corporation whose stock is owned by relatively few people and is not traded openly in stock markets is called a(n) ____________ corporation.

Correct AnswerverifiedA

Assume that you purchased 50 shares of Home Depot stock for $35 a share, that you received an annual dividend of $0.30 a share, and that you sold your Home Depot stock for $40 a share at the end of one year.What is the total return for your investment? (Ignore commission amounts for this question.)

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

A penny stock typically sells for less than $1 a share

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If you own 200 preferred shares that is cumulative and is currently 2 years in arrears, what total amount would you be owed if the company has sufficient funds to pay all dividends.The preferred share has a $5 dividend.

Correct AnswerverifiedShow Answer

What is the total cost when you purchase 100 shares at $44 each and the commission is $11

Correct AnswerverifiedShow Answer

Oil-Slick Shipping stock was priced at $70 at the beginning of the year.Over the year the corporation paid a dividend of $3.25 and its stock price at year-end was $65.What is the trailing dividend yield?

Correct AnswerverifiedShow Answer

What type of stock tends to stay stable during declines in the economy.

Correct AnswerverifiedShow Answer

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D

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A

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