Ch. 14 Per fin

Beverly Frickel purchased 100 shares of Gleason Systems stock for $42.50 per share. Her commission for this purchase was $35. She sold the stock two years later for $55 per share and a commission of $50. While she held the stock it paid a dividend of $1.50 per share. What was Beverly's total dollar return on this stock?

$1,315

Mellon Manufacturing has after-tax income of $3 million. It also has 2 million shares of stock outstanding. What is the firm's earnings per share?

$1.50 (3mil/2)

On May 20, 2010, Tony Blackman bought 100 shares of stock from XYZ Corporation. The quarterly dividend is $1.25 per share and the record date is May 25. How much will Tony receive for this quarterly dividend?

$125.00 (# of shares) x (amount per share)= Dividend

Arnell Johnson bought 200 shares of Black Petroleum Company for $95 per share and paid a commission of $60. He sold the stock five years later for $120 per share and paid $75 commission. While he held the stock, it paid a dividend of $5.50 per share. What was Arnell's total dollar return on this stock?

$5,965

James Brewer purchased 100 shares of stock for $72 a share. James also paid $55 commission. What was the total purchase price for this transaction?

$7,255 (100x72=7,200+55=7,255)

Jo Bower owns 150 shares of Data General stock. She purchased the stock for $24 a share. She sold her stock for $30 a share. The commissions required to buy and sell her stock total $120. Assuming that she received no dividends during the time she owned the stock, what is her total return for this transaction?

$780

Fred Manufacturing Company pays an annual dividend of $0.65 per share, has earnings per share of $2.50, and sells for $35 a share. What is this firm's dividend payout ratio?

26%

Initial Public Offering (IPO) are a _________investment.

?

Stocks issued by large corporations in mature industries often have high PE ratios

?

After a 2-for-1 stock split

Earnings per share decrease

Orlando Blodgett is buying stock in the Getaway Caribbean Cruise Company today. He had thought about buying the stock yesterday and if he had, he would have received this quarter's dividend. However, since he waited until today, he will not receive that dividend payment. Given this information, which one of the following dates applies to this stock today?

Ex-dividend date

If a corporation's earnings decline, the stock's value usually increases

False

Most speculators use a buy and hold technique (T/F)

False

When investors purchase stock on margin, they borrow from a stockbroker or brokerage firm.

False; just brokerage firm

When a corporation sells stock to the general public for the first time, it is referred to as a/an:

Initial public offering

stock exchange known to trade stock for innovative, growth companies is the:

NASDAQ

A stock that sells for less than $1 per share is called a ________ stock.

Penny

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.

Stop

Ms. Hart's stock club uses numerous charts that plot past price movements and other stock ratios. Her club relies on _______ analysis to determine stock selections.

Technical

If a stock has a 2-for-1 split:

Total market capitalization does not change

A cyclical stock is a stock that follows the business ccle of advantages and declimes in the economy (T/F)

True

From an investor's standpoint, an increase in estimates of earnings per share is a good sign (T/F)

True

It is common for professional advisory services like Morningstar, Standard and Poor's, and Value Line to charge for more detailed financial information than provided on other Internet Websites (T/F)

True

The P/E ratio is the price of a share of stock dividedby the corporation's earnings per share.

True

The fundamental theory is based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company (T/F)

True

stock dividends are determined by the

board of directors

a stock that remains stable during declines in the economy is called a(n)_________

defensive

James Green just bought a security which he expects will provide him with a quarterly cash payment, although that payment is not guaranteed. In fact, he expects the amount of the payment to vary over time. What type of payment is he expecting to receive?

dividend

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

market

To safeguard investments, stock owners who believe the price of their stock will go down during an option period will purchase a:

put option