Question 1

Growth stocks are issued by companies that have exhibited sales and earnings growth well above their industry average.

Accepted Answer

A) True 
 B)False

Question 2

The net income of the firm is $4 million dollars.The firm will pay $500,000 in dividends to the preferred shareholders.There are currently 1 million shares of common stock outstanding.What are the earnings per share for this firm?

Accepted Answer

A) $4.00 
B) $3.50 
C) $4.50 
D) $3.00

Question 3

Speculative stocks are often traded through the OTC Bulletin Board.

Accepted Answer

A) True 
 B)False

Question 4

A(n)________ is a legal agreement signed by a stockholder allowing someone else to vote on his or her behalf at the corporation's annual meeting.

Accepted Answer

A) voting contract 
B) agency contact 
C) contingency contract 
D) proxy 
E) none of the above

Question 5

When the market becomes too bullish,the average P/E ratio will fall.

Accepted Answer

A) True 
 B)False

Question 6

The dividend yield is calculated by dividing the dividend by?

Accepted Answer

A) EPS 
B) Book Value 
C) Income 
D) Market price

Question 7

A ________ is a measure of the performance of a group of stocks that represent the market or a sector of the market.

Accepted Answer

A) stock market index 
B) stock grouping 
C) market composite 
D) portfolio return 
E) none of the above

Question 8

The discounted dividends valuation model states that the value of a share of stock is the present value of its future dividends.

Accepted Answer

A) True 
 B)False

Question 9

ComChip is a computer chip manufacturer whose stock is selling at $50 per share.Next year's net earnings,minus the preferred stock dividends,is estimated to be $200,000.The company currently has 100,000 shares of common stock outstanding.What is the firm's P/E ratio?

Accepted Answer

A) 50.00 
B) 45.80 
C) 25.00 
D) 27.78

Question 10

Some companies distribute earnings per share in the form of dividends and some retain these earnings for future investment in the firm.

Accepted Answer

A) True 
 B)False

Exam 12: Investing in Stocks

Growth stocks are issued by companies that have exhibited sales and earnings growth well above their industry average.

The net income of the firm is $4 million dollars.The firm will pay $500,000 in dividends to the preferred shareholders.There are currently 1 million shares of common stock outstanding.What are the earnings per share for this firm?

Speculative stocks are often traded through the OTC Bulletin Board.

A(n) ________ is a legal agreement signed by a stockholder allowing someone else to vote on his or her behalf at the corporation's annual meeting.

When the market becomes too bullish,the average P/E ratio will fall.

The dividend yield is calculated by dividing the dividend by?

A ________ is a measure of the performance of a group of stocks that represent the market or a sector of the market.

The discounted dividends valuation model states that the value of a share of stock is the present value of its future dividends.

ComChip is a computer chip manufacturer whose stock is selling at $50 per share.Next year's net earnings,minus the preferred stock dividends,is estimated to be $200,000.The company currently has 100,000 shares of common stock outstanding.What is the firm's P/E ratio?

Some companies distribute earnings per share in the form of dividends and some retain these earnings for future investment in the firm.