Question 1

Why would an investor favor a common share over a preferred share?

Accepted Answer

A)  To obtain a bigger potential capital gain.
B)  To obtain repayment of the face value at maturity.
C)  To obtain a fixed dividend.
D)  To obtain a fixed coupon payment.
E)  To obtain a variable dividendF) D) and E)
G) None of the above

Question 2

Which of the following is a long-term stock investment technique?

Accepted Answer

A)  Purchasing on margin
B)  Selling short
C)  Dollar cost averaging
D)  Trading in options
E)  Buy low, sell highF) A) and D)
G) C) and D)

Question 3

A private corporation is a corporation whose stock is owned by relatively few people and is not traded openly in the stock market.

Accepted Answer

A) True 
 B)False

Question 4

The federal government requires corporations selling new issues of securities to disclose information about corporate earnings, assets and liabilities, products or services, and the qualifications of top management in a prospectus.

Accepted Answer

A) True 
 B)False

Question 5

A very safe investment that generally attracts conservative investors is called a(n)  ____________ stock.

Accepted Answer

A)  penny
B)  cyclical
C)  growth
D)  income
E)  blue-chipF) C) and E)
G) C) and D)

Question 6

Laws which are enforced by a federal regulatory body for the securities industry have been put in place to protect investors.

Accepted Answer

A) True 
 B)False

Question 7

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n)  ____________ stock.

Accepted Answer

A)  defensive
B)  cyclical
C)  growth
D)  income
E)  blue-chipF) C) and D)
G) B) and E)

Question 8

Which of the following statements is not true?

Accepted Answer

A)  When buying stock on margin, an investor borrows part of the money necessary to buy a particular stock.
B)  Usually, the brokerage firm lends the money or arranges for the loan in a margin transaction.
C)  Investors buy on margin because doing so offers them the potential for greater profits.
D)  The margin requirement is set by the exchanges.
E)  The current margin requirement is identical for all exchanges.F) C) and D)
G) None of the above

Question 9

John Baker bought BCE stocks for $33 a share one year ago.He sold the stock a year later for $36.50 a share.What was John's capital gains yield?

Accepted Answer

A)  3 percent
B)  3.50 percent
C)  4 percent
D)  9 percent
E)  10.6 percentF) None of the above
G) B) and C)

Question 10

A very safe investment that generally attracts conservative investors is called a(n)  ____________ stock.

Accepted Answer

A)  option
B)  call
C)  margin
D)  blue-chip
E)  putF) A) and B)
G) A) and C)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The minimum commission charged by most brokerage firms for buying or selling stock is between $50 and $75.

Accepted Answer

A) True 
 B)False

Question 13

Which one of the following is not a true statement?

Accepted Answer

A)  The over-the-counter market is a network of dealers who buy and sell the securities of corporations that are not listed on a securities exchange.
B)  Account executives in the OTC market specialize or make a market in the securities of one or more specific firms.
C)  Most OTC trading is conducted in person in the account executive's office.
D)  Since 1971, account executives' operating in the OTC market have used an electronic quotation system called NASDAQ.
E)  NASDAQ is regulated by the National Association of Securities Dealers.F) All of the above
G) A) and E)

Question 14

Equity financing is a popular choice to provide long-term financing for a corporation because

Accepted Answer

A)  a lender is always available to provide this type of financing.
B)  it does not have to be repaid.
C)  repayment doesn't have to be made for ten years or more.
D)  only interest must be paid for the first five years.
E)  it does not cost anything to sell in the primary market.F) A) and E)
G) B) and E)

Question 15

The annual shareholder return is the beginning-of-year stock price divided by the stocks annual dividend.

Accepted Answer

A) True 
 B)False

Question 16

Colin owns 100 shares of RIM stock.He purchased the stock for $100 a share.He sold the stock for $75 a share.The commissions required to buy and sell the stock totaled $60.Assuming that he received no dividends during the time he owned the stock, what is his total profit or loss from this transaction?

Accepted Answer

A)  Profit $2,500
B)  Profit $60.00
C)  Loss $2,500
D)  Loss $2,560
E)  Loss $2,440F) A) and E)
G) None of the above

Question 17

A long-term investment technique used by investors to purchase stock without paying a commission to a broker is called

Accepted Answer

A)  dollar cost appreciation.
B)  direct investment plan.
C)  unregulated transaction.
D)  regulated transaction.
E)  over-the-counter transaction.F) A) and E)
G) A) and B)

Question 18

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.F) B) and D)
G) A) and B)

Question 19

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called a

Accepted Answer

A)  dollar cost averaging.
B)  dividend reinvestment plan.
C)  buy and hold technique.
D)  regulated transaction.
E)  secured transaction.F) None of the above
G) A) and E)

Question 20

A penny stock typically sells for ___________

Accepted Answer

A)  $.01/share
B)  Less than $.10/share
C)  Less than $.50/share
D)  Less than $1.00/share
E)  less than $10/shareF) B) and C)
G) B) and E)

Exam 11: Investing in Stocks

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Correct Answer
verified

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock.

Correct Answer
verified

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Correct Answer
verified

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

Correct Answer
verified

Which one of the following is not a true statement?

Correct Answer
verified

Which of the following statements is not true?

Correct Answer
verified

A long-term investment technique used by investors to purchase stock without paying a commission to a broker is called

Correct Answer
verified

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called a

Correct Answer
verified

The minimum commission charged by most brokerage firms for buying or selling stock is between $50 and $75.

Correct Answer
verified

John Baker bought BCE stocks for $33 a share one year ago.He sold the stock a year later for $36.50 a share.What was John's capital gains yield?

Correct Answer
verified

Laws which are enforced by a federal regulatory body for the securities industry have been put in place to protect investors.

Correct Answer
verified

The annual shareholder return is the beginning-of-year stock price divided by the stocks annual dividend.

Correct Answer
verified

Why would an investor favor a common share over a preferred share?

Correct Answer
verified

A private corporation is a corporation whose stock is owned by relatively few people and is not traded openly in the stock market.

Correct Answer
verified

A penny stock typically sells for ___________

Correct Answer
verified

The federal government requires corporations selling new issues of securities to disclose information about corporate earnings, assets and liabilities, products or services, and the qualifications of top management in a prospectus.

Correct Answer
verified

Which of the following statements is not true?

Correct Answer
verified

Equity financing is a popular choice to provide long-term financing for a corporation because

Correct Answer
verified

Correct Answer
verified

Which of the following is a long-term stock investment technique?

Correct Answer
verified

Exam 11: Investing in Stocks

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following is not a true statement?

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

A long-term investment technique used by investors to purchase stock without paying a commission to a broker is called

Correct AnswerverifiedShow Answer

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called a

Correct AnswerverifiedShow Answer

The minimum commission charged by most brokerage firms for buying or selling stock is between $50 and $75.

Correct AnswerverifiedShow Answer

John Baker bought BCE stocks for $33 a share one year ago.He sold the stock a year later for $36.50 a share.What was John's capital gains yield?

Correct AnswerverifiedShow Answer

Laws which are enforced by a federal regulatory body for the securities industry have been put in place to protect investors.

Correct AnswerverifiedShow Answer

The annual shareholder return is the beginning-of-year stock price divided by the stocks annual dividend.

Correct AnswerverifiedShow Answer

Why would an investor favor a common share over a preferred share?

Correct AnswerverifiedShow Answer

A private corporation is a corporation whose stock is owned by relatively few people and is not traded openly in the stock market.

Correct AnswerverifiedShow Answer

A penny stock typically sells for ___________

Correct AnswerverifiedShow Answer

The federal government requires corporations selling new issues of securities to disclose information about corporate earnings, assets and liabilities, products or services, and the qualifications of top management in a prospectus.

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

Equity financing is a popular choice to provide long-term financing for a corporation because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a long-term stock investment technique?

Correct AnswerverifiedShow Answer

Correct Answer
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