Ch. 12

Samantha wants to sell short stock on Exxon Mobil. Rank the steps in the process.

1. Arrange to borrow a stock certificate for specific # of shares 2. Sell the borrowed stock 3. Buy the stock at a lower price than the price it sold for in step 2 3. Replace the stock borrowed form the brokerage firm .

Preferred stock:

Divided amount is known before purchase

Common stock:

Divided amount is unknown until declared

True or false: Dividend payments are required from corporations.

False

Who elects the board of directors and approves major changes in the corporate policies?

Stockholders

True or false: Rapidly growing firms typically pay little or no dividends.

True

The strategy of buying a stock hoping it will increase in value over time is called.

buying long

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

dollar costing average

Earnings per share is equal to a corporation's _________ divided b the number of outstanding _________ of a firm's common stock.

earnings; shares

Corporations do not have to repay the money obtained from _________ financing.

equity

A ________ order is a request to buy or sell a stock at the current price.

market

A stop-loss order is an order to sell a particular stock at the next available opportunity after its ________ price reaches a specified amount.

market

Stockholders usually have a right to vote. One vote usually equals:

one share of stock

The price of a share of stock divided by the corporation's earnings per share of stock is called:

price-earnings ratio

Which of the following are reported on investment websites?

price-earnings ratio; earnings per share

A ________ market is a market in which an investor purchases financial securities through an investment bank or other representative from the issuer of those securities.

primary

A ________ is a legal form that request that stockholders transfer their voting rights to someone within the organization who knows the situations of the company better.

proxy

A procedure in which the shares of stock owned by existing stockholders are divided into a larger (or smaller) number of shares is called a:

stock split

The key element to investing is:

time