Question 1

Patsy Banz owns 220 shares of a stock.For the last calendar quarter,the company paid a dividend of $0.47 a share.What is the total amount she received in her dividend check for this quarter?

Accepted Answer

A)  $0.47
B)  $47.00
C)  $94.20
D)  $103.40
E)  $25.85F) B) and E)
G) A) and B)

Question 2

Before a 2-for-1 stock split,Lisa's stock was valued at $50 per share.What is her per share value after the split?

Accepted Answer

A)  $25
B)  $50
C)  $100
D)  $125
E)  $150F) B) and E)
G) A) and B)

Question 3

If an investor owns cumulative preferred stock,missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

Accepted Answer

A) True 
 B)False

Question 4

Anthony Edwards wants to diversify his portfolio by adding a stock that maintains a stable value when the economy declines.What type of stock does Anthony want to add to his portfolio?

Accepted Answer

A)  defensive stock
B)  cyclical stock
C)  small-cap stock
D)  blue-chip stock
E)  growth stockF) All of the above
G) B) and E)

Question 5

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 E)
G) All of the above

Question 6

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 7

To raise capital,many corporate financial managers prefer selling common stock because:

Accepted Answer

A)  it doesn't have to be repaid until 10 to 15 years after it has been issued.
B)  interest payments to stockholders are lower than interest paid to a bank.
C)  common shareholders have no voting rights.
D)  interest paid to stockholders is tax deductible.
E)  the money obtained from stockholders does not have to be repaid.F) A) and C)
G) All of the above

Question 8

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 9

A large cap stock is a stock issued by a company that has capitalization of $10 billion or more.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following statements is true?

Accepted Answer

A)  When an investor buys stocks and assumes they will increase in value,he or she is using a procedure called selling short.
B)  Selling short is selling stock that has been borrowed from a brokerage firm.
C)  When you sell short,you buy today,knowing you must sell or cover your short transaction at a later date.
D)  In a short transaction,if the stock increases in value,the investor makes money.
E)  To make money in a short transaction,you must hold on the stock for at least one year.F) A) and B)
G) None of the above

Question 11

It is common for professional advisory services like Morningstar,Standard & Poor's,and Value Line to charge for more detailed financial information than provided on other Internet Web sites.

Accepted Answer

A) True 
 B)False

Question 12

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) B) and D)
G) A) and D)

Question 13

Masterworks Manufacturing has after-tax profits that total $625,000.If the firm has 250,000 shares,what is the amount of earnings per share?

Accepted Answer

A)  $0.40
B)  $1.00
C)  $2.00
D)  $2.50
E)  $4.00F) B) and E)
G) A) and E)

Question 14

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) A) and D)
G) A) and E)

Question 15

Mellon Manufacturing has after-tax income of $3 million.It also has 2 million shares of stock outstanding.What is the firm's earnings per share?

Accepted Answer

A)  $3.00
B)  $2.00
C)  $1.50
D)  $0.67
E)  $0.75F) B) and E)
G) D) and E)

Question 16

ABC Corporation holds its annual meeting in April.Maxine Star,who owns stock in the company,cannot attend the meeting.She can vote by:

Accepted Answer

A)  voluntary certificate.
B)  preemptive right.
C)  proxy.
D)  cumulative certificate.
E)  participatory certificatE.F) B) and E)
G) C) and E)

Question 17

An investment bank is a financial institution that assists corporations with issuing new shares of stock.

Accepted Answer

A) True 
 B)False

Question 18

The Beta is a measure that compares the volatility associated with a specific stock issue with the volatility of the Standard & Poor's 500 Index.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A long-term investment technique used by investors to purchase stock without paying a commission to a broker is called

Accepted Answer

A)  dollar cost appreciation.
B)  direct investment plan.
C)  unregulated transaction.
D)  regulated transaction.
E)  over-the-counter transaction.F) A) and C)
G) C) and D)

Exam 14: Investing in Stocks

Before a 2-for-1 stock split,Lisa's stock was valued at $50 per share.What is her per share value after the split?

Correct AnswerverifiedShow Answer

It is common for professional advisory services like Morningstar,Standard & Poor's,and Value Line to charge for more detailed financial information than provided on other Internet Web sites.

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

The Beta is a measure that compares the volatility associated with a specific stock issue with the volatility of the Standard & Poor's 500 Index.

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

Patsy Banz owns 220 shares of a stock.For the last calendar quarter,the company paid a dividend of $0.47 a share.What is the total amount she received in her dividend check for this quarter?

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

A large cap stock is a stock issued by a company that has capitalization of $10 billion or more.

Correct AnswerverifiedShow Answer

A long-term investment technique used by investors to purchase stock without paying a commission to a broker is called

Correct AnswerverifiedShow Answer

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

Masterworks Manufacturing has after-tax profits that total $625,000.If the firm has 250,000 shares,what is the amount of earnings per share?

Correct AnswerverifiedShow Answer

To raise capital,many corporate financial managers prefer selling common stock because:

Correct AnswerverifiedShow Answer

Anthony Edwards wants to diversify his portfolio by adding a stock that maintains a stable value when the economy declines.What type of stock does Anthony want to add to his portfolio?

Correct AnswerverifiedShow Answer

Mellon Manufacturing has after-tax income of $3 million.It also has 2 million shares of stock outstanding.What is the firm'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

An investment bank is a financial institution that assists corporations with issuing new shares of stock.

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

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

Correct AnswerverifiedShow Answer

ABC Corporation holds its annual meeting in April.Maxine Star,who owns stock in the company,cannot attend the meeting.She can vote by:

Correct AnswerverifiedShow Answer

If an investor owns cumulative preferred stock,missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

Correct AnswerverifiedShow Answer

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