Personal finance chapter 11

A bear market occurs when investors are pessimistic about the economy.

True

A stock split occurs when the shares of stock owned by existing stockholders are divided into a larger number of shares.

True

IPO's occur when a company sells stock to the general public for the first time.

True

Information on penny stocks can be hard to find.

True

Par value is an assigned value that is printed on a stock certificate.

True

Price Earning ratio is used to compare corporate earnings to the market price of a corporate stock.

True

Public stocks are avilable for anyone to buy.

True

Securities is a word that incorporates all investments.

True

Each of the following are ways to evaluate possible investments EXCEPT ____. a. the chaos theory b. the fundamental theory c. the technical theory d. the efficient market theory

a. the chaos theory

an investor can make a profit in stock in all the following ways except ____. a. Appreciation in value b. Bankruptcy c. Stock Splits d. Dividends

b. Bankruptcy

A marketplace where brokers meet to buy and sell stock is called ____. a. Krogers b. a securities exchange c. a brokerage firm d. ebay

b. a securities exchange

An example of a short-term investment strategy is ____. a. the buy-and-hold technique b. buying stock on margin c. dollar cost averaging d. a dividend reinvestment plan

b. buying stock on margin

What is the formula for calculating the total return on a stock? a. annual dividend ÷ current market value b. current return + capital gain c. dividend x number of shares x years held d. net earnings ÷ common stock outstanding

b. current return + capital gain

An example of a financial publication that provides information about specific companies is ____. a. AMEX b. Yahoo c. Barron's d. Stocks

c. Barron's

Cumulative preferred stock offers investors all the following advantages EXCEPT ____. a. dividends before common stockholders receive any b. a higher yield than common stock c. more potential growth than common stock d. less risk than common stock

c. more potential growth than common stock

Stock that has steady earnings and continues paying dividends even during economic declines is known as ____. a. cyclical stock b. growth stock c. small-cap stock d. defensive stock

d. defensive stock

A stop order requests that a stockbroker ____. a. buy a stock at the best possible price b. decide when to sell a stock c. buy or sell a stock at its current value d. sell a stock for a specific amount

d. sell a stock for a specific amount

Most over-the-counter stock is traded through ____. a. IPOs b. the NYSE c. the AMEX d. the NASDAQ

d. the NASDAQ

Small Cap stocks are generally defined as a company of 500 million or more in assets.

False

A corporation is required by law to hold monthly meetings.

False