Question 1

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 D)
G) B) and E)

Question 2

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) B) and C)

Question 3

Which of the following is a high-risk,short-term stock investing technique? I.Purchasing on margin
II) Dollar cost averaging
III) Hedging with options

Accepted Answer

A)   I only
B)   II only
C)   III only
D)   I,II and III are correct
E)   I and II are correctF) A) and D)
G) C) and E)

Question 4

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 5

What is an option? What is the difference between a call and put option?

Accepted Answer

An option is the right to buy or sell st...

Question 6

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Accepted Answer

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

Question 7

The investment bank's commission or spread:

Accepted Answer

A)   depends on the quality of the issuing corporation
B)   depends on the financial health of the issuing corporation
C)   reflects the transfer of risk of raising funds to the investment bank
D)   A and B are correct
E)   A,B and C are correctF) A) and B)
G) A) and C)

Question 8

A blue-chip stock is too speculative for most investors.

Accepted Answer

A) True 
 B)False

Question 9

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) C) and D)
G) B) and E)

Question 10

The most important priority that an investor in common stock enjoys is receiving cash dividends before preferred stockholders are paid any cash dividends.

Accepted Answer

A) True 
 B)False

Question 11

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock.

Accepted Answer

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

Question 12

Because Nortel is a ____________ corporation,Emily Codel can purchase stock with the help of an account executive through the secondary market.

Accepted Answer

A)   private
B)   public
C)   general
D)   institutional
E)   securitiesF) A) and B)
G) C) and D)

Question 13

Most speculators use a buy and hold technique.

Accepted Answer

A) True 
 B)False

Question 14

Convertible preferred stock may be exchanged,at the corporation's option,for a specified number of shares of common stock.

Accepted Answer

A) True 
 B)False

Question 15

A small cap stock is a stock that typically sells for less than 1$ per share.

Accepted Answer

A) True 
 B)False

Question 16

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

Question 17

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) B) and C)
G) A) and E)

Question 18

Today,it is possible for investors to access a corporation's home page in order to evaluate an investment in its stock.

Accepted Answer

A) True 
 B)False

Question 19

A securities exchange is a marketplace where member brokers who are representing investors meet to buy and sell securities.

Accepted Answer

A) True 
 B)False

Question 20

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) B) and C)
G) All of the above

Exam 11: Investing Basics and Evaluating Bonds

A blue-chip stock is too speculative for most investors.

Correct AnswerverifiedShow Answer

Because Nortel is a ____________ corporation,Emily Codel can purchase stock with the help of an account executive through the secondary market.

Correct AnswerverifiedShow Answer

What is an option? What is the difference between a call and put option?

Correct AnswerverifiedAn option is the right to buy or sell st...View AnswerShow Answer

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

Correct AnswerverifiedShow 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

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

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

Convertible preferred stock may be exchanged,at the corporation's option,for a specified number of shares of common stock.

Correct AnswerverifiedShow Answer

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 investment bank's commission or spread:

Correct AnswerverifiedShow Answer

A small cap stock is a stock that typically sells for less than 1$ per share.

Correct AnswerverifiedShow Answer

Most speculators use a buy and hold technique.

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

The most important priority that an investor in common stock enjoys is receiving cash dividends before preferred stockholders are paid any cash dividends.

Correct AnswerverifiedShow Answer

Today,it is possible for investors to access a corporation's home page in order to evaluate an investment in its stock.

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 AnswerverifiedShow Answer

Which of the following is a high-risk,short-term stock investing technique? I.Purchasing on margin II) Dollar cost averaging III) Hedging with options

Correct AnswerverifiedShow Answer

A securities exchange is a marketplace where member brokers who are representing investors meet to buy and sell securities.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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An option is the right to buy or sell st...
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