Question 1

Ms.Hart's stock club uses numerous charts that plot past price movements and other stock ratios.Her club relies on _______ analysis to determine stock selections.

Accepted Answer

A)  fundamental
B)  technical
C)  efficient market
D)  chart
E)  plotF) A) and D)
G) C) and D)

Question 2

A request that a stock be bought or sold at the current market price is called a ____________ order.

Accepted Answer

A)  market
B)  limit
C)  stop
D)  round
E)  discretionaryF) All of the above
G) B) and E)

Question 3

By using the Internet,it is possible to find market price quotations,but more detailed financial information about a corporation is unavailable to the average investor.

Accepted Answer

A) True 
 B)False

Question 4

Arnell Johnson bought 200 shares of Black Petroleum Company for $95 per share and paid a commission of $60.He sold the stock five years later for $120 per share and paid $75 commission.While he held the stock,it paid a dividend of $5.50 per share.What was Arnell's total dollar return on this stock?

Accepted Answer

A)  $5,000
B)  $4,865
C)  $1,100
D)  $6,100
E)  $5,965F) B) and E)
G) B) and D)

Question 5

A market order is a request that a stock be purchased or sold at the current market price.

Accepted Answer

A) True 
 B)False

Question 6

Gaby Williams is thinking about buying some stock but wants some protection should the issuer miss paying a dividend payment.Which one of the following features would help provide this protection?

Accepted Answer

A)  convertible
B)  callable
C)  cumulative
D)  cancellable
E)  commonF) D) and E)
G) A) and B)

Question 7

Jeff Goldblum has just purchased a security which has no maturity date and no promised payments.He can recoup his investment by either selling the security to another individual or to the issuer,if the issuer ever makes an offer to buy it.What type of security did Jeff purchase?

Accepted Answer

A)  stock option
B)  corporate bond
C)  government bond
D)  preferred stock
E)  common stockF) C) and E)
G) B) and D)

Question 8

Which one of the following is a true statement?

Accepted Answer

A)  An investment bank is a financial firm that assists organizations in raising funds.
B)  A corporation often deposits excess cash in an investment bank.
C)  An investment bank provides checking services for large corporations.
D)  Most investment banks help investors buy and sell a corporation's stock.
E)  Under current laws,an investment bank provides services to individuals but cannot provide banking services to corporations.F) None of the above
G) B) and E)

Question 9

Assume the beta for the stock market in general is 1.0 and the beta for World-Wide Television Productions is 2.4.If the stock market increases in value by 10 percent,what is the expected increase in value for the World-Wide Productions stock?

Accepted Answer

A)  12 percent
B)  20 percent
C)  24 percent
D)  48 percent
E)  14 percentF) D) and E)
G) A) and B)

Question 10

A defensive stock is a stock that typically sells for less than $1.

Accepted Answer

A) True 
 B)False

Question 11

Jennifer Fritz is thinking about purchasing the stock of the Sunshine Corporation at the current market price.What type of order should she place?

Accepted Answer

A)  market order
B)  limit order
C)  stop order
D)  discretionary order
E)  common orderF) B) and E)
G) A) and E)

Question 12

Barker Creek Clothing has after-tax income of $12.8 million.It also has 32 million shares of stock outstanding.What is the firm's earnings per share?

Accepted Answer

A)  $4.48
B)  $3.20
C)  $1.28
D)  $0.40
E)  $0.80F) C) and E)
G) None of the above

Question 13

After a 2-for-1 stock split:

Accepted Answer

A)  earnings per share decrease.
B)  earnings per share increase.
C)  capitalization decreases.
D)  capitalization increases.
E)  dividend yields decreasE.F) C) and D)
G) A) and E)

Question 14

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 15

Stocks issued by large corporations in mature industries often have high PE ratios.

Accepted Answer

A) True 
 B)False

Question 16

A stock that pays higher than average dividends is called an income stock.

Accepted Answer

A) True 
 B)False

Question 17

Matthew Boyd has saved $10,000 and wants to invest in common stock.Identify three investment methods he could use and briefly explain how each of those methods works.

Accepted Answer

1. Direct Stock Purchase: Matthew could ...

Question 18

Jo Bower purchased 150 shares of stock for $24 a share and sold it for $30 a share.The commissions required to buy and sell her stock totaled $120.Assuming she received no dividends during the time she owned the stock,what is her total return on this investment?

Accepted Answer

A)  $600
B)  $780
C)  $900
D)  $2,400
E)  $3,000F) All of the above
G) None of the above

Question 19

Stock dividends are determined by the:

Accepted Answer

A)  chief financial officer.
B)  board of directors.
C)  stockholders.
D)  corporate employees.
E)  U.S.government.F) C) and E)
G) B) and E)

Question 20

To safeguard investments,stock owners who believe the price of their stock will go down during an option period will purchase a:

Accepted Answer

A)  futures contract.
B)  long contract.
C)  call option.
D)  put option.
E)  margin contract.F) A) and D)
G) B) and C)

Exam 14: Investing in Stocks

Jennifer Fritz is thinking about purchasing the stock of the Sunshine Corporation at the current market price.What type of order should she place?

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Stocks issued by large corporations in mature industries often have high PE ratios.

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Barker Creek Clothing has after-tax income of $12.8 million.It also has 32 million shares of stock outstanding.What is the firm's earnings per share?

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Which one of the following is a true statement?

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A request that a stock be bought or sold at the current market price is called a ____________ order.

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To safeguard investments,stock owners who believe the price of their stock will go down during an option period will purchase a:

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By using the Internet,it is possible to find market price quotations,but more detailed financial information about a corporation is unavailable to the average investor.

Correct AnswerverifiedShow Answer

Jo Bower purchased 150 shares of stock for $24 a share and sold it for $30 a share.The commissions required to buy and sell her stock totaled $120.Assuming she received no dividends during the time she owned the stock,what is her total return on this investment?

Correct AnswerverifiedShow Answer

Gaby Williams is thinking about buying some stock but wants some protection should the issuer miss paying a dividend payment.Which one of the following features would help provide this protection?

Correct AnswerverifiedShow Answer

After a 2-for-1 stock split:

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A defensive stock is a stock that typically sells for less than $1.

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Stock dividends are determined by the:

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Jeff Goldblum has just purchased a security which has no maturity date and no promised payments.He can recoup his investment by either selling the security to another individual or to the issuer,if the issuer ever makes an offer to buy it.What type of security did Jeff purchase?

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

Assume the beta for the stock market in general is 1.0 and the beta for World-Wide Television Productions is 2.4.If the stock market increases in value by 10 percent,what is the expected increase in value for the World-Wide Productions stock?

Correct AnswerverifiedShow Answer

Matthew Boyd has saved $10,000 and wants to invest in common stock.Identify three investment methods he could use and briefly explain how each of those methods works.

Correct AnswerAnswered by ExamLex AI1. Direct Stock Purchase: Matthew could ...View AnswerShow Answer

Arnell Johnson bought 200 shares of Black Petroleum Company for $95 per share and paid a commission of $60.He sold the stock five years later for $120 per share and paid $75 commission.While he held the stock,it paid a dividend of $5.50 per share.What was Arnell's total dollar return on this stock?

Correct AnswerverifiedShow Answer

A stock that pays higher than average dividends is called an income stock.

Correct AnswerverifiedShow Answer

A market order is a request that a stock be purchased or sold at the current market price.

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Ms.Hart's stock club uses numerous charts that plot past price movements and other stock ratios.Her club relies on _______ analysis to determine stock selections.

Correct AnswerverifiedShow Answer

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1. Direct Stock Purchase: Matthew could ...
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