PFS chapter 12
A distribution of money, stock, or other property that is paid to the stockholders of a company is called a A) Dividend. B) Bond. C) Common stock. D) Savings account. E) Proxy.
A
A stock issued by a company that has a capitalization between $50 and $300 million or less is called a(n) ________ stock. A) micro cap B) blue chip C) penny D) midcap E) income
A
All of the following statements are correct except A) Dividend payments must be approved by the stockholders. B) Dividends are not mandatory. C) A dividend can be a distribution of money, stock, or other property. D) Dividends are paid out of profits. E) Utility companies typically distribute a higher percentage of earnings than rapidly growing firms.
A
Cliff retired 10 years ago and wants to still own a few stocks. Dividends are important to him, and he wants to invest in a large, stable corporation. He should purchase ________ stocks. A) blue chip B) cyclical C) micro cap D) penny E) midcap
A
Equity financing is money received from the sale of A) Common stock. B) A proxy. C) A savings account. D) Bonds. E) Dividends.
A
Excessive buying and selling of securities to generate commissions is called A) Churning. B) Flipping. C) Scamming. D) Marketing. E) Prospecting.
A
Since World War II, the average annual return for stocks has been almost A) 10%. B) 8%. C) 16%. D) 14%. E) 12%.
A
The formula "(Assets − Liabilities)/Number of Shares outstanding" equals A) Book value. B) Price-earnings ratio. C) Earnings per share. D) Dividend yield. E) Market value.
A
Which of the following is correct? A) The price/earnings ratio is the price of a share of stock divided by the corporation's earnings per share of stock. B) EPS is a key factor that serious investors use to evaluate stock investments. C) Earnings per share uses the price of the stock in the calculation. D) Ability to generate earnings is a minor factor in determining the value of a stock. E) Corporate earnings are reported in the proxy statement.
A
A legal form that requests that stockholders transfer their voting rights to individual(s) is called a A) Dividend. B) Proxy. C) Bond. D) Savings account. E) Common stock.
B
Dividend yield equals A) Annual dividend amount/Book value per share. B) Annual dividend amount/Current price per share. C) Annual dividend amount/Earnings per share. D) Quarterly dividend amount/Book value per share. E) Quarterly dividend amount/Price per share.
B
This calculation includes the yearly dividends in dollars plus the increase in the original purchase price of the investment. A) Price-earnings ratio B) Total return C) Market value D) Capital gain E) Book value
B
A marketplace where member brokers who represent investors meet to buy and sell securities is called a(n) A) Intermediary market. B) Primary market. C) Securities exchange. D) Initial public offering. E) Investment bank.
C
Amanda wants to be part of the most basic form of ownership for a corporation. She should invest in A) Dividends. B) Bonds. C) Common stock. D) A proxy. E) A savings account.
C
Book value equals A) (Liabilities − Assets)/Number of shares outstanding. B) (Assets + Liabilities)/Number of shares outstanding. C) (Assets − Liabilities)/Number of shares outstanding. D) (Assets + Liabilities)/Earnings per share. E) (Liabilities + Assets/Price-earnings ratio.
C
If you want to compare two companies, you should use A) Net income. B) Price per share. C) Price-earnings ratio. D) Dividend yield. E) Book value per share.
C
Which of the following is incorrect? A) Some investors do not know where to get the information they need to evaluate potential investments. B) Beginning investors sometimes worry that they won't know what the information they find about stocks really means. C) Very little information is available about stocks. D) There is no substitute for researching a potential investment. E) All of these statements are correct.
C
Which of the following statements about stock splits is correct? A) If a company has a 3-for-1 split, the price will increase by a factor of 3. B) If a company has a 5-for-1 split, the new number of shares will be equal to the old number of shares divided by 5. C) If a company has a 4-for-1 split, the new number of shares will be four times as many as before the split. D) If a company has a 2-for-1 split, the price will be doubled. E) None of these is correct.
C
A licensed individual who works for a brokerage firm and buys or sells securities for his or her clients is called a(n) A) Market maker. B) Account investor. C) Online executive. D) Account executive. E) All of these are correct.
D
A stock issued by a corporation that has a capitalization between $2 billion and $10 billion is called a(n) ________ stock. A) income B) penny C) blue chip D) midcap E) micro cap
D
This calculation uses the current price per share and the annual amount of money paid to investors from the company. A) Book value B) Price-earnings ratio C) Market value D) Dividend yield E) Earnings per share
D
This ratio uses the market price per share of the stock and the earning per share. A) Book value per share B) Net income C) Capital gain D) Price-earnings ratio E) Earnings per share
D
Which of the following changes would NOT cause analysts to change earnings estimates for a health care corporation? A) Industry B)Company's profits C) The economy in general D) Weather E) Company's sales
D
Which of the following statements is correct? A) Websites like Yahoo! Finance are not dependable. B) Individual company websites usually charge for access to their own financial reports. C) The Internet is not to be trusted as a reliable source to evaluate potential investments. D) The Internet provides websites that may be more up to date and thorough than printed materials. E) None of these is correct.
D
Why does a company split its stock? A) It wants fewer shares outstanding. B) The company wants to guarantee that the stock price will increase. C) The stock is trading at a low price, and the company wants to increase its stock value. D) The stock is trading at a high price, and the company wants to bring the price in line with a theoretical ideal range. E) It wants the total market capitalization to be lower than the current level.
D
A stock issued by a stable corporation that generally attracts conservative investors is called a(n) ________ stock. A) micro cap B) midcap C) penny D) income E) blue chip
E
A stock that typically sells for less than $5 per share (or in some cases, less than $1 per share) is called a(n) ________ stock. A) midcap B) micro cap C) blue chip D) income E) penny
E
An investment that pays higher-than-average dividends is called a(n) ________ stock. A) midcap B) blue chip C) penny D) micro cap E) income
E
Annual reports A) Include estimated financial data only. B) Are available only online from a corporation's Internet website. C) Are available only to current stockholders. D) Include the same information as a prospectus. E) May be sent to all stockholders on an annual basis.
E
Megan decided to start investing in stocks. Which of the following should she do first? A) Buy stocks based solely on her stockbroker's recommendation. B) Pick stocks at random. C) Choose stocks based on recommendations from her family members. D) Base her investing decisions on hot tips she hears at work. E) Research the corporations she is interested in as well as their industries.
E
NYSE stands for A) New York Securities Exchange. B) New Year Selling Exchange. C) Never Yet So Even. D) New York School of Engineering. E) New York Stock Exchange.
E
Total return equals A) Yearly dividends in dollars less capital gains. B) Capital gains. C) Capital gains less yearly dividends in dollars. D) Dividend yield. E) Yearly dividends in dollars plus capital gains.
E
Which of the following is some of the information found on a financial website such as Yahoo! Finance? A) Market capitalization (Market Cap). B) 52-week price range, number of shares traded (volume). C) Company name, last price (previous day's close), target price, price change (day's range). D) Dividend paid and yield. E) All of this information is included.
E
