Question 1

A private corporation is a corporation whose stocks are traded openly in stock markets and maybe purchased by individuals.

Accepted Answer

A) True 
 B)False

Question 2

Diversification means

Accepted Answer

A)  Buying a large amount of shares in one company
B)  Buying a large amount of shares in several companies within the same industry
C)  Buying all the shares of any one company
D)  Buying shares in different companies in different industries
E)  Buy a small amount of share in one companyF) A) and E)
G) A) and D)

Question 3

PowerLight Corporation holds its annual meeting in April.Marie Stewart, who owns stock in the company, cannot attend the meeting.She can vote by a:

Accepted Answer

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

Question 4

A blue-chip stock is a safe investment that generally attracts conservative investors.

Accepted Answer

A) True 
 B)False

Question 5

The Cumulative feature of a preferred stock is that a corporation may exchange, at its option, for a specified amount of money.

Accepted Answer

A) True 
 B)False

Question 6

One hundred shares or a multiple of 100 shares is called a(n)  ____________ lot.

Accepted Answer

A)  market
B)  limited
C)  round
D)  odd
E)  executiveF) D) and E)
G) B) and C)

Question 7

The NASDAQ is an electronic marketplace for over 10,000 different stocks.

Accepted Answer

A) True 
 B)False

Question 8

Astrid purchased 100 shares of Royal Bank for $76.00/share.Astrid also paid $29 commission.What was the total purchase price for this transaction?

Accepted Answer

A)  $29.00
B)  $76.00
C)  $7,600
D)  $7,629
E)  $7,571F) A) and E)
G) A) and D)

Question 9

The beta is an index that compares the risk associated with a specific stock issue with the risk of the stock market in general.

Accepted Answer

A) True 
 B)False

Question 10

ABC Corporation has 1 million shares outstanding.The corporation's after-tax earnings for 2004 were $2.75 million.What is ABC's EPS for 2004?

Accepted Answer

A)  $2.0
B)  $0.75
C)  $1.0
D)  $2.75
E)  $.50F) C) and D)
G) C) and E)

Question 11

The right of current stockholders to purchase any new stock that the corporation issues before it is offered to the general public is called a ____________ right.

Accepted Answer

A)  conversion
B)  convertible
C)  mandatory
D)  preemptive
E)  corporateF) B) and D)
G) B) and C)

Question 12

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

Question 13

The annual dividend yield is calculated by dividing the annual dividend by the initial stock investment.

Accepted Answer

A) True 
 B)False

Question 14

What does the acronym IPO stand for?

Accepted Answer

A)  Initial public offering
B)  Interested public offering
C)  Initial public order
D)  Interested public order
E)  Initial private orderF) A) and B)
G) A) and C)

Question 15

The record date is the date that the actual dividend payment is made to stockholders.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Becky Harie bought GBX Corporation stock for $24.38 a share.After six months, she received $2.25 in dividends and the market value the stock was $25.01 a share.If Becky decided to sell the stock today, what would be her shareholder return?

Accepted Answer

A)  11.52 percent
B)  23.03 percent
C)  11.81 percent
D)  23.63 percent
E)  22.62 percentF) C) and D)
G) All of the above

Question 18

The type of preferred stock that may be exchanged at the stockholder's option for common stock is

Accepted Answer

A)  corporate bond.
B)  cumulative preferred stock.
C)  participating preferred stock.
D)  convertible preferred stock.
E)  callable preferred stock.F) D) and E)
G) A) and B)

Question 19

The price-earnings ratio is calculated by dividing the earnings per share of a stock by its fair market value.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  futures contract.
B)  short contract.
C)  call option.
D)  put option.
E)  margin contract.F) A) and D)
G) All of the above

Exam 11: Investing in Stocks

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

The right of current stockholders to purchase any new stock that the corporation issues before it is offered to the general public is called a ____________ right.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

ABC Corporation has 1 million shares outstanding.The corporation's after-tax earnings for 2004 were $2.75 million.What is ABC's EPS for 2004?

Correct AnswerverifiedShow Answer

The annual dividend yield is calculated by dividing the annual dividend by the initial stock investment.

Correct AnswerverifiedShow Answer

Becky Harie bought GBX Corporation stock for $24.38 a share.After six months, she received $2.25 in dividends and the market value the stock was $25.01 a share.If Becky decided to sell the stock today, what would be her shareholder return?

Correct AnswerverifiedShow Answer

A blue-chip stock is a safe investment that generally attracts conservative investors.

Correct AnswerverifiedShow Answer

What does the acronym IPO stand for?

Correct AnswerverifiedShow Answer

The price-earnings ratio is calculated by dividing the earnings per share of a stock by its fair market value.

Correct AnswerverifiedShow Answer

Astrid purchased 100 shares of Royal Bank for $76.00/share.Astrid also paid $29 commission.What was the total purchase price for this transaction?

Correct AnswerverifiedShow Answer

Diversification means

Correct AnswerverifiedShow Answer

PowerLight Corporation holds its annual meeting in April.Marie Stewart, who owns stock in the company, cannot attend the meeting.She can vote by a:

Correct AnswerverifiedShow Answer

The type of preferred stock that may be exchanged at the stockholder's option for common stock is

Correct AnswerverifiedShow Answer

One hundred shares or a multiple of 100 shares is called a(n) ____________ lot.

Correct AnswerverifiedShow Answer

The beta is an index that compares the risk associated with a specific stock issue with the risk of the stock market in general.

Correct AnswerverifiedShow Answer

A private corporation is a corporation whose stocks are traded openly in stock markets and maybe purchased by individuals.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The NASDAQ is an electronic marketplace for over 10,000 different stocks.

Correct AnswerverifiedShow Answer

The Cumulative feature of a preferred stock is that a corporation may exchange, at its option, for a specified amount of money.

Correct AnswerverifiedShow Answer

The record date is the date that the actual dividend payment is made to stockholders.

Correct AnswerverifiedShow Answer

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