Before You Invest

An important difference between common stock and preferred stock is that the price of the common stock tends to be more ________ than that of preferred stock. a.) volatile b.) stable c.) expensive

a.)

Common stock ownership gives investors: a.) voting rights in shareholders meetings b.) guaranteed dividends c.) low risk with a high rate of return

a.)

Stock prices fall because: a.) there are more sellers than buyers b.) companies don't make profits everyday c.) dividends are paid

a.)

A company gets money from shareholders when: a.) its stock is issued b.) it makes a profit c.) shares are traded between buyers and sellers

a.)

"pf" Next to a stock means that this stock is: a.) private fund stock b.) preferred stock c.) performing at a higher than usual profit margin

b.)

Based on the Rule of 72, if you invested money and earned 8% interest, your money would double in a.) 72 years b.) 9 years c.) 8 years

b.)

Conservative, _____________, and moderate are types of risk takers. a.) democratic b.) speculative c.) entrepreneurial

b.)

Dividends are defined as: a.) stock b.) money paid out regularly (usually quarterly) to by a company to its share holders c.) bonds sold by municipalities

b.)

Mary's mother owns Target stock. She currently receives a dividend payment every quarter. She is guaranteed to receive a dividend every quarter as long as she owns Target stock. a.) True b.) False

b.)

Some investors place a greater priority on high earnings than on safety. They prefer __________ stocks. a.) no beta b.) low beta c.) high beta

b.)

The statement "risk and reward are related" implies: a.) making money in the stock market is risky b.) the lower the risk the lower the reward c.) there is no reward in taking a risk

b.)

You love KitKats! You bought 150 shares at $45 to add to your portfolio. While eating away, you earned a dividend of .75 a share. Later you decided you are getting fat and you sell your Hershey stock for $44 a share. How did your candy addiction affect you investment? a.) You made $102.50 b.) You lost $37.50 c.) You lost $150

b.)

A bond is: a.) contract for credit b.) money borrowed from a bank c.) a type of IOU

c.)

Cal owns 100 shares of Tricor stock. Tricor pays an annual dividend of $6.25 per share. Cal will receive his first quarterly payment on March 30. The dividend check will be for: a.) $6.25 b.) $625.00 c.) $156.25

c.)

IPO means: a.) investor protection option b.) income public offering c.) initial public offering

c.)

If a dividend has been announced but not yet paid, the stock is said to have gone: a.) dividend deferred b.) pre-dividend c.) ex-dividend

c.)

Interest earned on interest occurs with: a.) buying on margin b.) diversification c.) compounding

c.)

You could find a tombstone ad: a.) On a television commercial b.) In a company's annual report c.) In the Wall Street Journal

c.)