Question 1

If a corporation has more than one stock issue,the common stock is always listed first.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

ABC Corporation has 2 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)  $.50

Question 7

The term churning is to describe the excessive buying and selling of securities to generate commissions.

Accepted Answer

A) True 
 B)False

Question 8

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 9

The term securities encompass a broad range of investments that include stocks,bonds,mutual funds,options,and commodities.

Accepted Answer

A) True 
 B)False

Question 10

It is common for professional advisory services like SEDAR,Moody's,Standard & Poor's,and Value Line to charge for more detailed financial information than provided on other Internet Web sites.

Accepted Answer

A) True 
 B)False

Question 11

A stock that remains stable during declines in the economy is called a(n)____________ stock.

Accepted Answer

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

Question 12

A request that an order be executed at the next available opportunity after the market price of the stock reaches a specified price is called a ____________ order.

Accepted Answer

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

Question 13

MasterCracked Manufacturing has after-tax profits that total $725,000.If the firm has 250,000 shares,what is the amount of earnings per share?

Accepted Answer

A)  $1.25 
B)  $2 
C)  $2.90 
D)  $2.50 
E)  It is impossible to calculate earnings per share with this information.

Question 14

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.

Question 15

Which of the following is not a true statement?

Accepted Answer

A)  A high price-earnings ratio means high projected earnings in the future. 
B)  The price-earnings ratio for a corporation must be studied over a period of time. 
C)  The price-earnings ratio is based on the company's dividends. 
D)  The price-earnings ratio for one firm may be compared to the price-earnings ratio for all firms. 
E)  A low price-earnings ratio indicates that a stock may be a good investment and a high price-earnings ratios may indicate that it is a poor investment.

Question 16

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.

Question 17

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 18

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 19

Dollar-cost averaging enables investors to avoid the problem of buying high and selling low.

Accepted Answer

A) True 
 B)False

Question 20

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 at this time,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 percent

Exam 11: Investing Basics and Evaluating Bonds

If a corporation has more than one stock issue,the common stock is always listed first.

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

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.)

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

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

ABC Corporation has 2 million shares outstanding.The corporation's after-tax earnings for 2004 were $2.75 million.What is ABC's EPS for 2004?

The term churning is to describe the excessive buying and selling of securities to generate commissions.

Which of the following statements is not true?

The term securities encompass a broad range of investments that include stocks,bonds,mutual funds,options,and commodities.

It is common for professional advisory services like SEDAR,Moody's,Standard & Poor's,and Value Line to charge for more detailed financial information than provided on other Internet Web sites.

A stock that remains stable during declines in the economy is called a(n) ____________ stock.

A request that an order be executed at the next available opportunity after the market price of the stock reaches a specified price is called a ____________ order.

MasterCracked Manufacturing has after-tax profits that total $725,000.If the firm has 250,000 shares,what is the amount of earnings per share?

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

Which of the following is not a true statement?

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:

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

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

Dollar-cost averaging enables investors to avoid the problem of buying high and selling low.

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 at this time,what would be her shareholder return?