Exam 4 FINANCE
David invested $18,000 in the American Funds Euro-Pacific Growth fund. This fund charges a sales charge of 6.22%. What is the dollar amount of the sales charge to purchase shares?
$1,119.60
Using the information given here, what is the price-earnings ratio for DEF Company? (Hint: This is a two-step calculation.) Earnings = $180,000 Number of shares outstanding = 60,000 Price per share = $30 Book value per share = $10
$10
If a bond is quoted in the newspaper at 105, what is its price?
$1050
Crystal Ventures Mutual Fund contains stocks and securities valued at $476 million. The fund has liabilities that total to $6.3 million and the fund has issued 31 million shares. What is the Net Asset Value?
$15.15
Smith Corporation declared a quarterly dividend of $0.67 per share to stockholders. The record date is Friday, April 8th, the ex-dividend date is Wednesday, April 6th, and the payable date is Monday, May 9th for this dividend. If Samantha owns 250 shares of Smith stock on Friday, April 8th, what is her quarterly dividend amount?
$167.50
Gregory bought 500 shares of stock at a price of $60 per share. He later sold his stock at a price of $56. What was his total return on his investment?
$2,000 Capital Loss
Angela believes that Beamer Corporation's stock will drop in value. She borrows 150 shares from a brokerage firm when the stock was selling at $42 per share. When the stock's price dropped to $27 per share, she told the brokerage firm to buy 150 shares of Beamer stock. This stock was returned to the brokerage firm in replace of the stock she first borrowed. What is Angela's profit on her short selling investment?
$2,250
Lesley purchased 250 mutual fund shares at $18 per share. Lesley decided to sell her shares after the price increased to $29 per share. What is Lesley's capital gain?
$2,750
Using the information given here, what are the earnings per share for GHI Company? Number of shares outstanding = 150,000 Price per share = $60 Book value per share = $20 Earnings = $375,000
$2.5
Taliyah invested $21,000 in the American Funds Euro-Pacific Growth fund. This fund charges a sales charge of 4.35%. What is the net amount available for investment?
$20,086.50
If you bought stock using dollar cost averaging as listed here, what was your average cost? June 15 $50 1.75 shares July 15 $50 1.65 shares August 15 $50 2.00 shares
$27.78
Using the information given here, what are the earnings per share for DEF Company? Number of shares outstanding = 60,000 Price per share = $30 Book value per share = $10 Earnings = $180,000
$3
The investments in the Alamo Basics Contingency Fund have a current market value of $800 million. The fund also has liabilities that total $60 million. If this mutual fund has 20 million shares, what is the net asset value per share?
$37
Kerri believes that Bluebill Corporation's stock will drop in value. She borrows 200 shares from a brokerage firm when the stock was selling at $56 per share. When the stock's price dropped to $31 per share, she told the brokerage firm to buy 200 shares of Bluebill's stock. This stock was returned to the brokerage firm in replace of the stock she first borrowed. What is Kerri's profit on her short selling investment?
$5,000
Olivia currently has the money to purchase only 75 shares of Tumble Corporation. Tumble's shares are currently selling for $82 per share. If Olivia uses the current margin requirements to purchase 150 shares of Tumble stock, what is the amount of money that she personally has invested in the company?
$6,150
Nicholas purchased 150 shares of ABC Mutual Fund at $10.50 and sold them one year later at a price of $14.50. His total capital gain was
$600
Hannah purchased 65 shares of Best Buy stock at $36 per share. After 3 years, Hannah sold the stock for $43 per share. During the time she held the stock, Hannah received the dividends totaling $4.00 per share. What is Hannah's total return?
$715
Alan currently has the money to purchase only 125 shares of Hurricane Corporation. Hurricane's shares are currently selling for $34 per share. If Alan uses the current margin requirements to purchase 250 shares of Hurricane stock, what is the amount of the total investment?
$8,500
Book value equals
(assets - liabilities) / number of shares outstanding
Nicholas initially invested $2,400 in a technology company. The company recently paid annual dividends of $22 and his year-end investment value was $2,000. What was the rate of return on his investment?
-15.75%
Given the information shown here for NMOP Inc., calculate the dividend yield. Annual dividend = $4.00 Number of shares outstanding = 40,000 Current market price per share = $40.00 Book value per share = $8.00
10%
If you bought a stock on July 1, 2016, and sold it on July 15, 2016, you may be a(n)
2 of these are correct
Greg initially invested $7,000 in a transportation company. The company recently paid annual dividends of $86 and his year-end investment value was $8,340. What was the rate of return on his investment?
20.37%
Assume that you purchase a $1,000 bond issued by Kohls that pays 8% interest each year, paid every 6 months. What is the amount of each interest payment?
40
A _____________ is an employer-sponsored retirement account, and participating in one is one of the easiest ways to begin an investment program.
401(K) account
How is an ETF similar to a closed-end fund?
All of these are correct
An example of a lifecycle fund is a fund that
Assists investors with planning for retirement by a specific date.
All of the following are true of capital gains distributions, except:
Capital gains distributions are commonly paid twice a year.
According to the video, what are the other fees that fund investors must consider in addition to a load charge?
Contingent Deferred Sales Load and Management Fee
Which of the following determine the prices for shares for closed-end funds?
Factors of supply and demand, Value of stocks and other investments contained in the fund's portfolio, and Investor expectations
Ethan wants to purchase some stock for the first time. Which of the following is correct?
His commission should be lower at an online broker than at a full-service broker.
All of the following are ways that investors can make money by investing in closed-end funds, exchange-traded funds, or open-end funds:
Income Dividends, Capital Gains Distributions, and Capital Gains
Which of the following statements is FALSE?
Individual investors who purchase U.S government securities must hold the investments until maturity
Which of the following is true about mutual funds and taxes?
Investment companies are required to send each shareholder a year-end statement that specifies how much each received in dividends and capital gain distributions.
All of the following are considered characteristics of Treasury Notes, except:
Maturities for treasury notes can range from a few days to one year
Annual reports
May be sent to all stockholders on an annual basis
Which of the following describes a growth company?
Profits are reinvested in the company for future growth.
Megan decided to start investing in stocks. Which of the following should she do first?
Research the corporations she is interested in as well as their industries.
All of the following are considered characteristics of Treasury Bills or T-Bills, except:
T-Bills are sold in maximum units of $500
Which of the following is correct for a closed-end fund?
The price of its shares is determined by supply and demand, by the value of stocks in the portfolio, and by investor expectations.
Melinda wants to withdraw some money from her mutual fund. She has a minimum required asset value of $10,000. Which of the following is not an option available for her to systematically withdraw some money?
Withdraw all principal and leave interest dividends and capital gain distributions in the account
The opportunity, but not the obligation, to buy a security within a specified period of time at a guaranteed price is
a call option
The opportunity, but not the obligation, to sell a security within a specified period of time at a guaranteed price is
a put option
According to the video, in order to make money by selling short, what must you be correct in predicting?
a stock will decrease in value
All of the following can be factors that influence business failure risk except
all of these
Corporations use bonds
all of these
How do mutual funds provide returns to their shareholders?
all of these
If you start a new job and are offered the opportunity to participate in the company's 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?
all of these decisions can affect
Which of the following is some of the information found on a financial website such as Yahoo! Finance?
all of this information is included
Dividend yield equals
annual dividend amount/ current price per share
Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?
asset allocation funds
Investors who earn larger returns because they borrow part of the money needed to by a particular stock are using which of the following techniques?
buying on margin
When you sell your shares in a mutual fund, you may receive a profit that results from an increase in value called
capital gain
Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are
capital gain distributions
Hammerhead Corporation declared a quarterly dividend of $0.84 per share to stockholders. The record date is Friday, March 11th, the ex-dividend date is Wednesday, March 9th, and the payable date is Monday, April 11th for this dividend. Chris purchased 50 shares on January 1st, Adam purchased 100 shares on March 8th, and Emma purchased 65 shares on March 10th. Who is eligible to receive this quarterly dividend?
chris and adam
Excessive buying and selling of securities to generate commissions is called
churning
Which type of fund has the prices determined by factors of supply and demand like the prices of a stock?
closed-end fund
After you purchase an investment, you should
continually evaluate your investment
All of the following are true of convertible corporate bonds, except:
convertible bonds are backed only by the reputation of the issuing corporation
Monitoring the ___________________ will tell an individual whether the investment is increasing or decreasing in value.
current values
A distribution of money, stock, or other property that is paid to the stockholders of a company is called a
dividend
This calculation uses the current price per share and the annual amount of money paid to investors from the company.
dividend yield
According to the video, what should be on the left side of an investment value graph?
dollar amounts
A fancy way of saying you need to diversify your investments is
don't put all of your eggs in one basket
If you hold mutual fund shares in your Roth individual retirement account, the taxes on reinvested income will be
eliminated
Which of the following types of stock funds invests in stock issued by companies with a long history of paying dividends?
equity income funds
Which of the following is defined as the date when a stock trades "without dividend" and the seller is entitled to a declared dividend payment?
ex-dividend date
All of the following are true of high-yield bonds, except:
high-yield bonds have a lower risk of default
The principal or face value of Treasury Inflation-Protected Securities (TIPS) _____________ with inflation and interest payments ______________ with inflation.
increase; increase
Which of the following types of stock funds invests in the same companies included in the Standard & Poor's 500 stock index?
index funds
Which of the following risks associated with preferred stocks or government or corporate bonds is a result of changes in rates in the economy?
interest rate risk
Which of the following provides up-to-date information that can help investors made decisions quickly without having to make a trip to the library?
internet
According to the video, what should be placed near the middle of an investment value graph?
investment price
When investing, in your role as an investor you should not
let the investments manage themselves
Devin wants to purchase DEF stock for a specified price of $40.00 or less, and he understands this request will be executed after all previously received orders have been fulfilled. He should use a
limit order
If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investment's value, you are most concerned with
liquidity
Level Four Investments include all of the following, except:
low-risk investments
Sally wants to invest in a fund that invests only in stock. Which of the following will meet her needs?
midcap funds
All of the following are true of mortgage bonds, except:
mortgage bonds are less secure than other types of corporate bonds
Earnings per share equals the
none of these
Whose shares are issued and redeemed by the investment company at the request of investors?
open-end fund
Inflation risk deals with
reduction in purchasing power
Which of the following types of stock funds invest in stock traded within one specific region of the world?
regional funds
A bond that is repaid from the income generated by the project it is designed to finance is called a(n)
revenue bond
Although Level Two Investments are more speculative than Level One Investments, the primary goal is to choose investments that provide _____________ and ______________.
safety; income
The NYSE is an example of a(n)
securities exchange
Bonds of a single issue that mature on different dates are called ____________ bonds.
serial
What are the risks associated with using the margin strategy?
stock decreases in value, margin calls, and loan repayment and interest
Which of the following is not one of the four components of the risk factor to be considered when evaluating investments?
stock risk
Which of the following has returned an average of almost 10% per year since 1926?
stocks
If you can leave your funds alone for 5-10 years or more, which of the following investments would be most appropriate?
stocks and mutual funds
If you need access to your funds in two years or less, which of the following investments would be least appropriate?
stocks and mutual funds
Gavin has owned MNOP stock for several years and has seen the stock increase in value from $20 to $35. He wants to "lock in" his gains, so he needs to place an order that will sell his stock at the next available opportunity after its market price drops to $33. What kind of order should he use?
stop-loss order
Interest paid to corporate bond owners is
tax-deductible for the corporation
Which types of companies (as discussed in the video) are considered growth investments?
technology companies
All of the following are true of open-ended funds, except:
the major disadvantage of open-ended funds is the cost of buying and selling shares
This calculation includes the yearly dividends in dollars plus the increase in the original purchase price of the investment.
total return
Which of the following steps should be completed before making your first investment?
work to balance your budget
Total return equals
yearly dividends in dollars plus capital gains