Question 1

A stock that pays higher than average dividends is called a(n)  ____________ stock.

Accepted Answer

A)   defensive
B)   income
C)   growth
D)   cyclical
E)   blue-chip

Question 2

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 3

If an investor owns participating preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

Accepted Answer

A) True 
 B)False

Question 4

When investors are optimistic about the overall economy and buy stocks, it is known as a(n)  ____________ market.

Accepted Answer

A)   book
B)   bear
C)   bull
D)   equity
E)   declining

Question 5

Which of the following statements is not true?

Accepted Answer

A)   Corporations are required by law to have two stockholder meetings each year.
B)   Stockholders must approve any amendment of the corporate charter.
C)   Stockholders must approve the sale of certain corporate assets.
D)   Corporations are required by law to distribute annual reports.
E)   Stockholders may vote in person or by proxy.

Question 6

Doug Baker bought Toronto Dominion stocks for $50 a share one year ago. He sold the stock a year later for $55.50 a share. What was John's capital gains yield?

Accepted Answer

A)   3 percent
B)   3.50 percent
C)   9.9 percent
D)   11 percent
E)   111 percent

Question 7

A speculative technique whereby an investor borrows part of the money needed to buy a particular stock.

Accepted Answer

A)   dollar cost averaging.
B)   dividend reinvestment plan.
C)   buy and hold technique.
D)   margin.
E)   secured transaction.

Question 8

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 9

Dividend payments on common stock are guaranteed, but the amount is determined by the board of directors.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Which of the following statements is not true?

Accepted Answer

A)   When an investor buys stocks and assumes they will increase in value, he or she is using a procedure called buying long.
B)   Selling short is selling stock that has been borrowed from a stockbroker or brokerage firm.
C)   When you sell short, you buy today, knowing that 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 loses money.
E)   To make money in a short transaction, you must be correct in predicting that a stock will decrease in value.

Question 12

An investment bank is a financial institution where large corporations can deposit excess cash for short periods of time.

Accepted Answer

A) True 
 B)False

Question 13

Dividends remain with the stock until

Accepted Answer

A)   five days after the date of record.
B)   two business days after the date of record.
C)   five days before the date of record.
D)   two business days before the date of record.
E)   five days before the actual payment date.

Question 14

A penny stock typically sells for less than $.10 a share

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A stock that follows the business cycle of advances and declines in the economy is called a(n)  ____________ stock.

Accepted Answer

A)   defensive
B)   cyclical
C)   growth
D)   income
E)   blue-chip

Question 19

Assume that you purchased 200 shares of C-Mac Industries stock for $110 a share, that you received an annual dividend of $4.00 a share, and that you then sold your stock for $130 a share at the end of one year. What is the total profit on your investment? (Ignore commission amounts for this question.)

Accepted Answer

A)   $200
B)   $400
C)   $1,200
D)   $800
E)   $2,200

Question 20

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

Exam 11: Investing in Stocks

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

A penny stock typically sells for less than $.10 a share

Correct Answer
verified

When investors are optimistic about the overall economy and buy stocks, it is known as a(n) ____________ market.

Correct Answer
verified

An investment bank is a financial institution where large corporations can deposit excess cash for short periods of time.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Which of the following statements is not true?

Correct Answer
verified

Which of the following statements is not true?

Correct Answer
verified

A speculative technique whereby an investor borrows part of the money needed to buy a particular stock.

Correct Answer
verified

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

Correct Answer
verified

Doug Baker bought Toronto Dominion stocks for $50 a share one year ago. He sold the stock a year later for $55.50 a share. What was John's capital gains yield?

Correct Answer
verified

A stock that follows the business cycle of advances and declines in the economy is called a(n) ____________ stock.

Correct Answer
verified

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

Correct Answer
verified

Dividend payments on common stock are guaranteed, but the amount is determined by the board of directors.

Correct Answer
verified

Dividends remain with the stock until

Correct Answer
verified

If an investor owns participating preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

Correct Answer
verified

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

Correct Answer
verified

A stock that pays higher than average dividends is called a(n) ____________ stock.

Correct Answer
verified

Exam 11: Investing in Stocks

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

Correct AnswerverifiedShow Answer

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

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 penny stock typically sells for less than $.10 a share

Correct AnswerverifiedShow Answer

When investors are optimistic about the overall economy and buy stocks, it is known as a(n) ____________ market.

Correct AnswerverifiedShow Answer

An investment bank is a financial institution where large corporations can deposit excess cash for short periods of time.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

A speculative technique whereby an investor borrows part of the money needed to buy a particular stock.

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

Doug Baker bought Toronto Dominion stocks for $50 a share one year ago. He sold the stock a year later for $55.50 a share. What was John's capital gains yield?

Correct AnswerverifiedShow Answer

A stock that follows the business cycle of advances and declines in the economy is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Dividend payments on common stock are guaranteed, but the amount is determined by the board of directors.

Correct AnswerverifiedShow Answer

Dividends remain with the stock until

Correct AnswerverifiedShow Answer

If an investor owns participating preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

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

A stock that pays higher than average dividends is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

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