Question 1

Changes in stock prices tend to lag changes in level of economic activity by several months.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is a readily available source of industry comparisons?
I. Standard & Poor's
II. MSN Money, Yahoo Finance and other financial portals
III. Mergent (Moody's)
IV. The Wall Street Journal

Accepted Answer

A)  I and II only 
B)  I, II and III only 
C)  III and IV only 
D)  II, III and IV only 
A)  I and II only 
B)  I, II and III only 
C)  III and IV only 
D)  II, III and IV only B

Question 3

Generally, the market price of a stock is

Accepted Answer

A)  below its book value. 
B)  above its book value. 
C)  equal to its par value. 
D)  equal to its book value. 
A)  below its book value. 
B)  above its book value. 
C)  equal to its par value. 
D)  equal to its book value. B

Question 4

A total asset turnover of .9 means that every

Accepted Answer

A)  $1 in sales is supported by $9.00 of assets. 
B)  $0.90 in assets produces $1 in net earnings. 
C)  $1 in total assets is replaced on average every .9 years. 
D)  $1 in assets produces $0.90 in sales. 
A)  $1 in sales is supported by $9.00 of assets. 
B)  $0.90 in assets produces $1 in net earnings. 
C)  $1 in total assets is replaced on average every .9 years. 
D)  $1 in assets produces $0.90 in sales.

Question 5

A company has sales of $640,000, net profit after taxes of $23,000, a total asset turnover of 4.17 and an equity multiplier of 1.67. What is the return on equity?

Accepted Answer

A)  25.0% 
B)  9.0% 
C)  8.1% 
D)  4.5% 
A)  25.0% 
B)  9.0% 
C)  8.1% 
D)  4.5%

Question 6

The Federal Reserve through monetary policy can help expand the economy by

Accepted Answer

A)  lowering income taxes on individuals. 
B)  reducing tariffs such that foreign exports can increase. 
C)  supporting a moderate growth of the money supply. 
D)  increasing government spending on the national infrastructure. 
A)  lowering income taxes on individuals. 
B)  reducing tariffs such that foreign exports can increase. 
C)  supporting a moderate growth of the money supply. 
D)  increasing government spending on the national infrastructure.

Question 7

Fundamental analysis encompasses return, but not risk, in the valuation process.

Accepted Answer

A) True 
 B)False

Question 8

The income statement is one indicator of how well a company has done against its competitors.

Accepted Answer

A) True 
 B)False

Question 9

Some companies may actually thrive in a weak economy.

Accepted Answer

A) True 
 B)False

Question 10

Return on assets is a very important analytical tool because it measures how effectively management is using a firm's assets to generate profits.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following businesses will be positively impacted by a weak dollar?

Accepted Answer

A)  a retail firm that sells only domestic made products 
B)  a firm that buys 55% of its inputs from Japan 
C)  a firm that sells 85% of its product to buyers in other countries 
D)  a hair stylist 
A)  a retail firm that sells only domestic made products 
B)  a firm that buys 55% of its inputs from Japan 
C)  a firm that sells 85% of its product to buyers in other countries 
D)  a hair stylist

Question 12

A dividend payout ratio of 75% would be typical of

Accepted Answer

A)  a company whose earnings were also growing at about 75% per year. 
B)  a newly listed company trying to attract investors. 
C)  a firm in the rapid growth stage. 
D)  a profitable firm with limited growth prospects. 
A)  a company whose earnings were also growing at about 75% per year. 
B)  a newly listed company trying to attract investors. 
C)  a firm in the rapid growth stage. 
D)  a profitable firm with limited growth prospects.

Question 13

Fundamental analysis involves the in-depth study of the

Accepted Answer

A)  role of nondiversifiable risk in an investor's portfolio. 
B)  financial condition and operating results of a given firm. 
C)  pattern of security prices as revealed in chart formations. 
D)  role of diversifiable risk in an investor's portfolio. 
A)  role of nondiversifiable risk in an investor's portfolio. 
B)  financial condition and operating results of a given firm. 
C)  pattern of security prices as revealed in chart formations. 
D)  role of diversifiable risk in an investor's portfolio.

Question 14

Cash flow from operations includes all of the following adjustments to net income EXCEPT

Accepted Answer

A)  purchases of new equipment. 
B)  depreciation. 
C)  increase or decrease in current liabilities. 
D)  increase or decrease in current inventory. 
A)  purchases of new equipment. 
B)  depreciation. 
C)  increase or decrease in current liabilities. 
D)  increase or decrease in current inventory.

Question 15

The higher the debt-equity ratio, the greater the difference between return on assets and return on equity.

Accepted Answer

A) True 
 B)False

Question 16

If a firm has an ROA of 10% and an ROE of 10%, then the

Accepted Answer

A)  operating results of the firm are improving. 
B)  firm has no financial leverage. 
C)  firm must have enough cash on hand to pay some extra dividends. 
D)  firm is losing money. 
A)  operating results of the firm are improving. 
B)  firm has no financial leverage. 
C)  firm must have enough cash on hand to pay some extra dividends. 
D)  firm is losing money.

Question 17

The balance sheet summarizes the company's operations over the last fiscal year.

Accepted Answer

A) True 
 B)False

Question 18

Which one of the following statements is correct?

Accepted Answer

A)  Stock prices are independent of the economic cycle. 
B)  Stock prices change simultaneously with the economy. 
C)  Stock prices often start to rise before the end of a recession. 
D)  Changes in stock prices generally lag changes in the economy. 
A)  Stock prices are independent of the economic cycle. 
B)  Stock prices change simultaneously with the economy. 
C)  Stock prices often start to rise before the end of a recession. 
D)  Changes in stock prices generally lag changes in the economy.

Question 19

Which of these factors can affect stock prices?

Accepted Answer

A)  contract the level of economic activity 
B)  falling interest rates 
C)  lower the rate of inflation 
D)  All of these factors can affect stock prices. 
A)  contract the level of economic activity 
B)  falling interest rates 
C)  lower the rate of inflation 
D)  All of these factors can affect stock prices.

Question 20

Which of the following businesses will be positively impacted by a strong dollar?

Accepted Answer

A)  a retail firm that sells only domestic made products 
B)  a firm that buys 55% of its inputs from Japan 
C)  a firm that sells 85% of its product to buyers in other countries 
D)  a financial planner 
A)  a retail firm that sells only domestic made products 
B)  a firm that buys 55% of its inputs from Japan 
C)  a firm that sells 85% of its product to buyers in other countries 
D)  a financial planner

Changes in stock prices tend to lag changes in level of economic activity by several months.

Which of the following is a readily available source of industry comparisons? I. Standard & Poor's II. MSN Money, Yahoo Finance and other financial portals III. Mergent (Moody's) IV. The Wall Street Journal

Generally, the market price of a stock is

A total asset turnover of .9 means that every

A company has sales of $640,000, net profit after taxes of $23,000, a total asset turnover of 4.17 and an equity multiplier of 1.67. What is the return on equity?

The Federal Reserve through monetary policy can help expand the economy by

Fundamental analysis encompasses return, but not risk, in the valuation process.

The income statement is one indicator of how well a company has done against its competitors.

Some companies may actually thrive in a weak economy.

Return on assets is a very important analytical tool because it measures how effectively management is using a firm's assets to generate profits.

Which of the following businesses will be positively impacted by a weak dollar?

A dividend payout ratio of 75% would be typical of

Fundamental analysis involves the in-depth study of the

Cash flow from operations includes all of the following adjustments to net income EXCEPT

The higher the debt-equity ratio, the greater the difference between return on assets and return on equity.

If a firm has an ROA of 10% and an ROE of 10%, then the

The balance sheet summarizes the company's operations over the last fiscal year.

Which one of the following statements is correct?

Which of these factors can affect stock prices?

Which of the following businesses will be positively impacted by a strong dollar?

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters

Exam 7: Analyzing Common Stocks

Changes in stock prices tend to lag changes in level of economic activity by several months.

Which of the following is a readily available source of industry comparisons? I. Standard & Poor's II. MSN Money, Yahoo Finance and other financial portals III. Mergent (Moody's) IV. The Wall Street Journal

Generally, the market price of a stock is

A total asset turnover of .9 means that every

A company has sales of $640,000, net profit after taxes of $23,000, a total asset turnover of 4.17 and an equity multiplier of 1.67. What is the return on equity?

The Federal Reserve through monetary policy can help expand the economy by

Fundamental analysis encompasses return, but not risk, in the valuation process.

The income statement is one indicator of how well a company has done against its competitors.

Some companies may actually thrive in a weak economy.

Return on assets is a very important analytical tool because it measures how effectively management is using a firm's assets to generate profits.

Which of the following businesses will be positively impacted by a weak dollar?

A dividend payout ratio of 75% would be typical of

Fundamental analysis involves the in-depth study of the

Cash flow from operations includes all of the following adjustments to net income EXCEPT

The higher the debt-equity ratio, the greater the difference between return on assets and return on equity.

If a firm has an ROA of 10% and an ROE of 10%, then the

The balance sheet summarizes the company's operations over the last fiscal year.

Which one of the following statements is correct?

Which of these factors can affect stock prices?

Which of the following businesses will be positively impacted by a strong dollar?

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters