Question 1

Many investors and analysts believe that a corporation's ability or inability to generate _____ in the future may be one of the most significant factors that account for an increase or decrease in the value of a stock.

Accepted Answer

A)  stockholder support
B)  dividends
C)  earnings
D)  new business locations
E)  new business ideasF) A) and D)
G) A) and C)

Question 2

Why do corporations issue common stock? Why do investors buy that stock?

Accepted Answer

Corporations issue common stock to finan...

Question 3

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

Accepted Answer

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

Question 4

Most speculators purchase stock and hold onto it for a number of years.

Accepted Answer

A) True 
 B)False

Question 5

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

Accepted Answer

A)  the same as
B)  lower than
C)  higher than
D)  unrelated to
E)  saferF) B) and E)
G) B) and C)

Question 6

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 7

Which one of the following is a true statement?

Accepted Answer

A)  The over-the-counter market is a network of dealers who buy and sell the stocks of corporations that are not listed on a securities exchange.
B)  Account executives specialize in a particular stock.
C)  OTC trading is for investors who want to buy or sell stocks in stores.
D)  Specialists are not members of the NYSE.
E)  Most NYSE members represent brokerage firms that do not charge commissions on security trades.F) A) and E)
G) A) and B)

Question 8

Which one of the following is a true statement regarding account executives?

Accepted Answer

A)  They are generally not liable for client losses that result from their recommendations.
B)  It is wise to allow an account executive to make investment decisions without the client's approval.
C)  An account executive cannot buy and sell securities for clients and help them develop your investment program.
D)  An account executive is not licensed to buy or sell securities for clients.
E)  The arbitration clause allows clients to sue the brokerage firm that an account executive represents.F) C) and E)
G) A) and B)

Question 9

James Brewer purchased 100 shares of stock for $72 a share.James also paid a $55 commission.What was the total purchase price for this transaction?

Accepted Answer

A)  $55.00
B)  $127.00
C)  $7,237.50
D)  $7,255.00
E)  $7,347.50F) B) and D)
G) B) and C)

Question 10

When a corporation sells stock to the general public for the first time,it is referred to as a:

Accepted Answer

A)  primary market opportunity.
B)  secondary market offering.
C)  initial public offering.
D)  investment bank offering.
E)  primary stockholder opportunity.F) A) and E)
G) A) and C)

Question 11

When a stock splits two-for-one,you should expect the price per share to:

Accepted Answer

A)  decrease to half its pre-split price.
B)  decrease in value by 75 percent or more.
C)  remain unchanged.
D)  increase to more than twice its pre-split price.
E)  increase to twice its pre-split price.F) B) and C)
G) D) and E)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

A low market-to-book ratio could indicate that a stock is undervalued.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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 16

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)  Dividend
E)  Common stockF) A) and E)
G) C) and D)

Question 17

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) D) and E)

Question 18

Acme Widget,Inc.has one million shares of common stock outstanding at a price per share of $85.The company earned $5 million after taxes.The annual dividend is $3.50 per share.The company has assets of $125,000,000 and liabilities of $25,000,000.What is the dividend yield rounded to nearest hundredth of a percent?

Accepted Answer

A)  3.50 percent
B)  1.43 percent
C)  5.00 percent
D)  4.12 percent
E)  3.44 percentF) A) and D)
G) B) and E)

Question 19

Which one of the following statements is false?

Accepted Answer

A)  Numerical measures can help investors decide if it is time to buy or sell a stock.
B)  Future earnings may be one of the most significant factors to examine when evaluating a stock.
C)  Higher earnings generally equate to higher stock value.
D)  The price for a share of stock is determined by what another investor is willing to pay for it.
E)  It is impossible to determine corporate earnings by using investment research and financial calculations.F) C) and D)
G) B) and E)

Question 20

Equity financing is a preferred choice to provide financing for a corporation because:

Accepted Answer

A)  a lender is always available to provide this type of financing.
B)  it does not have to be repaid.
C)  repayment doesn't have to be made for ten years or more.
D)  only interest must be paid for the first five years.
E)  it does not have to buy back the shares.F) A) and D)
G) A) and C)

Exam 14: Investing in Stock

Which one of the following is a true statement?

Correct Answer
verified

Why do corporations issue common stock? Why do investors buy that stock?

Correct Answer
verified
Corporations issue common stock to finan...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

When a corporation sells stock to the general public for the first time,it is referred to as a:

Correct Answer
verified

A low market-to-book ratio could indicate that a stock is undervalued.

Correct Answer
verified

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 Answer
verified

James Brewer purchased 100 shares of stock for $72 a share.James also paid a $55 commission.What was the total purchase price for this transaction?

Correct Answer
verified

Which one of the following statements is true?

Correct Answer
verified

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

Correct Answer
verified

Most speculators purchase stock and hold onto it for a number of years.

Correct Answer
verified

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

Correct Answer
verified

When a stock splits two-for-one,you should expect the price per share to:

Correct Answer
verified

Which one of the following statements is false?

Correct Answer
verified

Equity financing is a preferred choice to provide financing for a corporation because:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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 Answer
verified

Many investors and analysts believe that a corporation's ability or inability to generate _____ in the future may be one of the most significant factors that account for an increase or decrease in the value of a stock.

Correct Answer
verified

Which one of the following is a true statement regarding account executives?

Correct Answer
verified

Exam 14: Investing in Stock

Which one of the following is a true statement?

Correct AnswerverifiedShow Answer

Why do corporations issue common stock? Why do investors buy that stock?

Correct AnswerverifiedCorporations issue common stock to finan...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a corporation sells stock to the general public for the first time,it is referred to as a:

Correct AnswerverifiedShow Answer

A low market-to-book ratio could indicate that a stock is undervalued.

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

James Brewer purchased 100 shares of stock for $72 a share.James also paid a $55 commission.What was the total purchase price for this transaction?

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most speculators purchase stock and hold onto it for a number of years.

Correct AnswerverifiedShow Answer

When compared to corporate bonds,the dividend yield on preferred stocks is often _____the yield on bonds.

Correct AnswerverifiedShow Answer

When a stock splits two-for-one,you should expect the price per share to:

Correct AnswerverifiedShow Answer

Which one of the following statements is false?

Correct AnswerverifiedShow Answer

Equity financing is a preferred choice to provide financing for a corporation because:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Many investors and analysts believe that a corporation's ability or inability to generate _____ in the future may be one of the most significant factors that account for an increase or decrease in the value of a stock.

Correct AnswerverifiedShow Answer

Which one of the following is a true statement regarding account executives?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Corporations issue common stock to finan...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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