Question 1

Which one of the following is a true statement regarding stock advisory services?

Accepted Answer

A)  When choosing a stock advisory service that charges fees for their information,the quality of the information is always excellent.
B)  Stock advisory services provide only printed materials to evaluate potential stock investments.
C)  There are less than a hundred stock advisory services that charge fees for their information.
D)  The information provided by investors' services consists of simple alphabetical listings only.
E)  For stocks,Value Line,Standard & Poor's,and Morningstar are three of the most popular advisory services.F) B) and E)
G) A) and B)

Question 2

Matthew Boyd has saved $10,000 and wants to invest in common stock.Give examples of long-term techniques and short-term techniques that he could use to invest.Describe the difference between short-term and long-term investments.

Accepted Answer

Long-term techniques:
(1)buy-and-hold t...

Question 3

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

Question 4

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 an 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) B) and E)
G) A) and B)

Question 5

What is the primary difference between common stock and preferred stock?

Accepted Answer

The primary difference is that preferred...

Question 6

Kay Powers wants to diversify her portfolio by investing in a firm that has the potential to earn above average profits compared to other firms in the economy.What type of stock is Kay thinking about adding to her portfolio?

Accepted Answer

A)  Defensive stock
B)  Cyclical stock
C)  Small cap stock
D)  Blue chip stock
E)  Growth stockF) A) and D)
G) B) and E)

Question 7

The stock of ABC Company has a dividend yield of 4%.The corporation has paid a dividend of $3.00 a share over the last 12 months and has earnings per share of $5.What is the current market price per share?

Accepted Answer

A)  $13
B)  $25
C)  $75
D)  $93
E)  $225F) D) and E)
G) C) and D)

Question 8

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Accepted Answer

A)  a direct investment plan.
B)  a dividend reinvestment plan.
C)  dollar cost averaging.
D)  buy-and-hold.
E)  day trading.F) A) and C)
G) D) and E)

Question 9

Warren Buffett is well known for successfully employing which theory to identify both stocks and corporations that are undervalued?

Accepted Answer

A)  Technical analysis
B)  Beta
C)  Efficient market hypothesis
D)  Fundamental analysis
E)  Stock market bubbleF) A) and B)
G) B) and E)

Question 10

Initial public offerings are a ________ investment.

Accepted Answer

A)  guaranteed
B)  speculative
C)  safe
D)  conservative
E)  blue chipF) A) and E)
G) B) and E)

Question 11

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 12

The price-earnings ratio for a stock investment is calculated as:

Accepted Answer

A)  price per share divided by the number of stockholders.
B)  the number of stockholders divided by the price per share.
C)  price per share divided by the number of shares outstanding.
D)  price per share divided by the earnings per share.
E)  the earnings per share divided by the price per share.F) A) and E)
G) C) and E)

Question 13

A limit order is a request to buy or sell a stock at a specified price or better.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following statements is true regarding buying stock on margin?

Accepted Answer

A)  When buying stock on margin,an investor borrows stock from the brokerage firm.
B)  Usually,a bank arranges for the loan in a margin transaction.
C)  Investors buy on margin because doing so offers them the potential to buy more stock and therefore earn larger returns.
D)  The margin requirement is established by the New York Stock Exchange.
E)  The current margin requirement is 25 percent.F) A) and C)
G) A) and E)

Question 15

Acme Widget,Inc.has 1,000 shareholders who own a total of two million shares of its common stock.The stock currently sells for $80 per share.The company earned $8 million after taxes.The annual dividend is $0.50 per share.The company has assets of $125 million and liabilities of $25 million.What is the P-E ratio?

Accepted Answer

A)  10
B)  11
C)  13
D)  20
E)  25F) A) and E)
G) D) and E)

Question 16

Last year,High-Tech Electronics earned $2.00 per share.If a share of its stock is selling for $60,what is the firm's P-E ratio?

Accepted Answer

A)  0.03
B)  2
C)  30
D)  33
E)  60F) A) and B)
G) A) and C)

Question 17

Which one of the following statements is true?

Accepted Answer

A)  Board members are appointed by a company's management.
B)  Stockholders receive a tax break on dividend income.
C)  Investors should be concerned about the corporation's ability to earn profits and pay dividends in the future.
D)  If a cash dividend is declared by the board of directors,each stockholder will receive a different dollar amount per share.
E)  Corporate dividends are always paid in cash.F) A) and B)
G) A) and E)

Question 18

Carol Fisher wants to sell the stock of Hathaway International at the next available price after the market price reaches $50 per share.What type of order should she place?

Accepted Answer

A)  Market order
B)  Limit order
C)  Stop order
D)  Discretionary order
E)  Common orderF) D) and E)
G) B) and C)

Question 19

A market for existing financial securities that are currently traded among investors is called the ________ market.

Accepted Answer

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

Question 20

Beverly Frickel purchased 100 shares of Gleason Systems stock for $32.50 per share.Her commission for this purchase was $25.She sold the stock two years later for $45 per share and a commission of $40.What was Beverly's total dollar return on this stock?

Accepted Answer

A)  $1,100
B)  $1,185
C)  $1,500
D)  $3,275
E)  $4,460F) C) and D)
G) B) and D)

Exam 14: Investing in Stocks

Which one of the following is a true statement regarding stock advisory services?

Correct Answer
verified

What is the primary difference between common stock and preferred stock?

Correct Answer
verified
The primary difference is that preferred...
View Answer

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Correct Answer
verified

A market for existing financial securities that are currently traded among investors is called the ________ market.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Last year,High-Tech Electronics earned $2.00 per share.If a share of its stock is selling for $60,what is the firm's P-E ratio?

Correct Answer
verified

Matthew Boyd has saved $10,000 and wants to invest in common stock.Give examples of long-term techniques and short-term techniques that he could use to invest.Describe the difference between short-term and long-term investments.

Correct Answer
verified
Long-term techniques:
(1)buy-and-hold t...
View Answer

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

Correct Answer
verified

The price-earnings ratio for a stock investment is calculated as:

Correct Answer
verified

A limit order is a request to buy or sell a stock at a specified price or better.

Correct Answer
verified

Warren Buffett is well known for successfully employing which theory to identify both stocks and corporations that are undervalued?

Correct Answer
verified

Which one of the following statements is true regarding buying stock on margin?

Correct Answer
verified

Initial public offerings are a ________ investment.

Correct Answer
verified

Carol Fisher wants to sell the stock of Hathaway International at the next available price after the market price reaches $50 per share.What type of order should she place?

Correct Answer
verified

Beverly Frickel purchased 100 shares of Gleason Systems stock for $32.50 per share.Her commission for this purchase was $25.She sold the stock two years later for $45 per share and a commission of $40.What was Beverly's total dollar return on this stock?

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

Kay Powers wants to diversify her portfolio by investing in a firm that has the potential to earn above average profits compared to other firms in the economy.What type of stock is Kay thinking about adding to her portfolio?

Correct Answer
verified

The stock of ABC Company has a dividend yield of 4%.The corporation has paid a dividend of $3.00 a share over the last 12 months and has earnings per share of $5.What is the current market price per share?

Correct Answer
verified

Which one of the following statements is true?

Correct Answer
verified

Exam 14: Investing in Stocks

Which one of the following is a true statement regarding stock advisory services?

Correct AnswerverifiedShow Answer

What is the primary difference between common stock and preferred stock?

Correct AnswerverifiedThe primary difference is that preferred...View AnswerShow Answer

A long-term investment technique that allows investors the option to reinvest cash dividends to purchase stock of the corporation is called:

Correct AnswerverifiedShow Answer

A market for existing financial securities that are currently traded among investors is called the ________ market.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Last year,High-Tech Electronics earned $2.00 per share.If a share of its stock is selling for $60,what is the firm's P-E ratio?

Correct AnswerverifiedShow Answer

Matthew Boyd has saved $10,000 and wants to invest in common stock.Give examples of long-term techniques and short-term techniques that he could use to invest.Describe the difference between short-term and long-term investments.

Correct AnswerverifiedLong-term techniques: (1)buy-and-hold t...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The price-earnings ratio for a stock investment is calculated as:

Correct AnswerverifiedShow Answer

A limit order is a request to buy or sell a stock at a specified price or better.

Correct AnswerverifiedShow Answer

Warren Buffett is well known for successfully employing which theory to identify both stocks and corporations that are undervalued?

Correct AnswerverifiedShow Answer

Which one of the following statements is true regarding buying stock on margin?

Correct AnswerverifiedShow Answer

Initial public offerings are a ________ investment.

Correct AnswerverifiedShow Answer

Carol Fisher wants to sell the stock of Hathaway International at the next available price after the market price reaches $50 per share.What type of order should she place?

Correct AnswerverifiedShow Answer

Beverly Frickel purchased 100 shares of Gleason Systems stock for $32.50 per share.Her commission for this purchase was $25.She sold the stock two years later for $45 per share and a commission of $40.What was Beverly's total dollar return on this 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

Kay Powers wants to diversify her portfolio by investing in a firm that has the potential to earn above average profits compared to other firms in the economy.What type of stock is Kay thinking about adding to her portfolio?

Correct AnswerverifiedShow Answer

The stock of ABC Company has a dividend yield of 4%.The corporation has paid a dividend of $3.00 a share over the last 12 months and has earnings per share of $5.What is the current market price per share?

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The primary difference is that preferred...
View Answer

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
verified
Long-term techniques:
(1)buy-and-hold t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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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