FIN 131 Ch. 11-13

A stock generally issued by companies expected to provide an uninterrupted stream of dividends and good, longterm growth prospects is called a(n):

a. blue-chip stock

Which of the following statements regarding bonds is true?

a. bonds are liabilities of the issuer

Bonds are issued:

a. by corporations and state, local, and federal governments

. _____ dividends are the most common form of dividends.

a. cash

Discount brokers will:

a. charge low commissions

A convertible bond would let the investor exchange it for:

a. common stock

_____ have no maturity date.

a. common stocks

Stocks whose prices tend to increase when the economy is in an expansionary stage and decline during a contractionary stage are called:

a. cyclical stocks

_____ gives the property owner an allowance for the decline in the physical condition of real estate over time

a. depreciation

Corporate ownership by an investor is evidenced by:

b. common stocks

____ are senior, unsecured, unsubordinated debt securities issued by an underwriting bank.

b. exchange traded notes

An investment that earns interest on interest is said to be earning a:

b. fully compounded rate of return

Stocks whose earnings have increased at an above-average level over time are called:

b. growth stocks

Which of the following bond mutual funds invest in tax-exempt securities?

b. municipal bond funds

When you buy 300 shares of a company, you have purchased a(n):

b. round lot

Ownership in a corporation would be represented by:

b. stocks

The business risk faced by an investor when investing in a company is related to:

d. the firm's ability to meet operating expenses in a timely manner

Which of the following is a characteristic of a stop-loss order?

d. the stop-loss order sells a stock when the market price drops below a specified price

In the stock market, the market cap of a large-cap stock is more than:

a. $10 billion

The _____ is based on 500 different stocks

a. Standard and Poor's Index

A bond selling below par value is selling at:

a. a discount

When a bond is sold between coupon payment dates, the buyer pays the seller for the _____, which is the prorated share of the upcoming coupon payment.

a. accrued interest

An _____ provides financial and descriptive information about a firm's operations in the recent past to the internal and external interested parties.

a. annual stockholders' report

Exchange traded mutual funds (ETFs):

a. are traded throughout the day on stock exchanges

To most stockholders, the main advantages of common stock investments are

a. attractive returns and active trading

Instructing your broker to buy or sell a stock at a particular price is a:

a. limit order

The advantages of a dividend reinvestment plan (DRP) may include:

a. stock sold at a discount

The Dow Jones Industrial Average is based on:

b. 30 stocks

Stockbrokers are also known as:

b. account executives

_____ involves dividing a portfolio among different classes of securities in order to preserve the capital by protecting the portfolio against negative market developments.

b. asset allocation

A market order is transacted at the:

b. best price when the order is entered

An investor receives a return from an investment due to

b. capital gains on the sale of an investment

The Securities Investor Protection Corporation (SIPC) provides insurance to protect the investor from:

c. a brokerage firm's financial failure

Which of the following is an order to sell a stock when the market price drops to or below a specified level?

c. a stop-loss order

_____ is a process to settle disputes between a brokerage firm and its clients

c. arbitration

A(n) _____ oversees a mutual fund's portfolio and makes the buy and sell decisions

c. investment advisor

All mutual funds always charge a:

c. management fee

Cash dividends on common stock are most often paid:

c. quarterly

An annual fee charged by some mutual funds to cover promotion and selling expenses is called the:

d. 12b-1 fee

The _____ reflects the total market value of over 98 to 99% of all publicly traded stock in the United States

d. Dow Jones Wilshire 5000 index

The federal government regulates the disclosure of information about securities through the:

d. Securities and Exchange Commission

_____ funds are highly speculative investments that seek large profits from capital gains.

d. aggressive growth

Which of the following types of brokers enables an investor to trade electronically from his or her personal computer?

d. an online broker

A fund that is structured to match the performance of a certain market segment is known as a(n) _____ fund

d. index

Which of the following investments has the highest liquidity risk?

d. land

The _____ of a stock reflects stockholders' confidence.

d. price/earnings ratio

A collection of securities assembled to meet common investment goals is called a(n):

e. portfolio

Which of the following best describes portfolio management?

e. the buying, selling, and holding of various securities in order to meet a set of predetermined investment needs and objectives