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

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

Accepted Answer

A) True 
 B)False

Question 3

Capital gains yield is the stock's appreciation in value divided by its end-of-year stock price.

Accepted Answer

A) True 
 B)False

Question 4

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 5

You shouldn't be wary of any stocks that you learn about on financial bulletin boards, chat room, newsgroups or email.

Accepted Answer

A) True 
 B)False

Question 6

Most speculators use a buy and hold technique.

Accepted Answer

A) True 
 B)False

Question 7

A small-cap stock is defined as a corporation that has total capitalization of

Accepted Answer

A) more than $250 million. 
B) less than $150 million. 
C) less than $175 million. 
D) less than $200 million. 
E) no capitalization.

Question 8

The price earnings ratio is a corporation's after-tax earnings divided by the corporation's earnings per share of stock outstanding over the last 12 months.

Accepted Answer

A) True 
 B)False

Question 9

The investment bank's commission or spread:

Accepted Answer

A) depends on the quality of the issuing corporation 
B) depends on the financial health of the issuing corporation 
C) reflects the transfer of risk of raising funds to the investment bank 
D) A and B are correct 
E) A, B and C are correct

Question 10

A request that a stock be bought or sold at a specified price is called a ____________ order.

Accepted Answer

A) market 
B) limit 
C) stop 
D) round 
E) discretionary

Question 11

Daisy Diaz purchased 100 shares of Cameco Inc.at $40 dollars a share.The shares subsequently split three for one on December 31, 2004 and currently trade at $50 a share.If Daisy sells all of her shares, what will be his capital gain?

Accepted Answer

A) $11,000 
B) $5,500 
C) $4,000 
D) $6,000 
E) $6,500

Question 12

A small cap stock is a stock that typically sells for less than 1$ per share.

Accepted Answer

A) True 
 B)False

Question 13

Kate Babini owns 250 shares of Gildan Activewear.Suppose that for the last calendar quarter, Gildan paid $0.28 a share.What is the total amount she received in her dividend cheque for this quarter?

Accepted Answer

A) $0.28 
B) $2.80 
C) $70.00 
D) $250.00 
E) $892.00

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A stock that sells for less than $l a share is called a

Accepted Answer

A) fractional stock. 
B) dollar stock. 
C) penny stock. 
D) ten-dollar stock. 
E) bad investment.

Question 16

Efficient market hypothesis contradicts what theory?

Accepted Answer

A) Technical Analysis 
B) Fundamental Analysis 
C) Economic Theory 
D) Modern Economics 
E) Free market theory

Question 17

Last year, Hi-Lo Electronics earned $2.50 per share.If the current market value for a share of stock is $55, what is the firm's PE ratio?

Accepted Answer

A) 0.025 
B) 2.5 
C) 22 
D) 55 
E) It is impossible to calculate a PE ratio with this information.

Question 18

Enron's collapse has put thousands of innocent Americans out of work and wiped out the retirement portfolios of thousands more.

Accepted Answer

A) True 
 B)False

Question 19

Dividends are paid out of profits, and

Accepted Answer

A) dividends are guaranteed. 
B) dividend payments must be approved by the firm's board of directors. 
C) dividends are paid before a firm's taxes are paid. 
D) dividends are usually paid twice a year. 
E) dividends are guaranteed and paid twice a year.

Question 20

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

Exam 11: Investing in Stocks

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

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

Capital gains yield is the stock's appreciation in value divided by its end-of-year stock price.

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

You shouldn't be wary of any stocks that you learn about on financial bulletin boards, chat room, newsgroups or email.

Most speculators use a buy and hold technique.

A small-cap stock is defined as a corporation that has total capitalization of

The price earnings ratio is a corporation's after-tax earnings divided by the corporation's earnings per share of stock outstanding over the last 12 months.

The investment bank's commission or spread:

A request that a stock be bought or sold at a specified price is called a ____________ order.

Daisy Diaz purchased 100 shares of Cameco Inc.at $40 dollars a share.The shares subsequently split three for one on December 31, 2004 and currently trade at $50 a share.If Daisy sells all of her shares, what will be his capital gain?

A small cap stock is a stock that typically sells for less than 1$ per share.

Kate Babini owns 250 shares of Gildan Activewear.Suppose that for the last calendar quarter, Gildan paid $0.28 a share.What is the total amount she received in her dividend cheque for this quarter?

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

A stock that sells for less than $l a share is called a

Efficient market hypothesis contradicts what theory?

Last year, Hi-Lo Electronics earned $2.50 per share.If the current market value for a share of stock is $55, what is the firm's PE ratio?

Enron's collapse has put thousands of innocent Americans out of work and wiped out the retirement portfolios of thousands more.

Dividends are paid out of profits, and

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.