FINN 3003 CH. 15
7) The stock exchange which is the largest in terms of dollar volume is the
A) NYSE
10) Stocks would be most favorably affected by
A) a decline in interest rates and a decline in inflation.
19) When you place an order to buy or sell stock, you must specify all of the following except
A) commission you are willing to pay.
17) A measure of inflation that represents prices of various products, such as groceries, household products, housing, and gasoline is the ________ index.
A) consumer price
9) When economic conditions are weak, the aggregate demand for products and services
A) declines.
11) A PE of 10 means that the firm's stock price is ten times the firm's
A) earnings per share.
19) The CPI is used as part of the ________ analysis.
A) economy
13) Compared to discount brokers, full service brokers
A) give stock advice to their clients.
14) Usually, firms with high P/E ratios are ________ firms.
A) growth
26) The ________ shows the firm's operating results over a period of time.
A) income statement
24) A ________ order is an order to execute a transaction to buy or sell a stock only if the price is within the range specified.
A) limit
15) Generally, stocks perform better when interest rates are
A) low.
12) On the over-the-counter market trades are executed by
A) market-makers.
24) If a firm performs strongly over a period of time the impact on its stock price is
A) relative.
22) In reading a corporate income statement, cost of goods sold is subtracted from
A) revenue.
5) What is the highest price paid for a share of Coca Cola stock in the last 52 weeks?
B) $45.26
32) How much cash would you need to purchase 500 shares of stock at $21 per share plus brokerage commissions of $125, if you purchase on margin and the margin requirement is 50%?
B) $5,312.50
12) A company's earnings are $3 per share, its dividend is $2 per share, and its stock price is $30 per share. Its PE ratio is
B) 10.
22) A round lot of stock is ________ shares.
B) 100
29) The Federal Reserve currently limits the margin rate, the amount that can be borrowed from the brokerage firm, to ________ percent.
B) 50
34) Which of the following is the most risky?
B) Buying on margin
4) Which of the following is not a good source of current stock quotations?
B) Magazines, such as Fortune
18) The ________ is a measure of inflation that represents prices of products such as coal, lumber, and metals that are used to produce other products.
B) PPI
21) Assets and liabilities on the balance sheet are classified as
B) short-term and long-term.
20) A company's annual report usually includes all of the following but
B) testimonials from employees.
4) The best time to sell stock is when you
B) think the stock price has peaked.
21) A ________ symbol is used to identify a stock for trading purposes.
B) ticker
15) Some stock brokers or analysts encourage frequent buying and selling of your securities which may cause you to
C) incur additional tax liabilities.
15) A low P/E ratio usually means that a firm is
C) is a mature firm.
25) A ________ order is an order to execute a transaction to buy or sell a stock at its prevailing price.
C) market
20) If you are a day trader you would probably utilize a(n)
C) online brokerage service.
26) A ________ is an order for a brokerage firm to sell a stock when the price falls to a specified level.
C) sell stop order
2) Fundamental analysis is based on all of the following except
C) the firm's stock price over the last year.
18) With an online brokerage firm, you have all of the following except
B) a personal sales representative to answer your questions.
27) A ________ is an order for a brokerage firm to buy a stock when the price rises to a specified level.
B) buy stop order
13) When corporate taxes rates are ________, the after-tax earnings of corporations are ________, which means ________ money for shareholders.
B) decreased; increased; more
12) The means by which the U.S. government imposes taxes on individuals and corporations and by which it spends its money is the ________ policy.
B) fiscal
5) People with seats on the NYSE who execute stock trades for others are called
B) floor traders.'''
23) The valuation of stocks based on an examination of revenues or earnings is called
B) fundamental analysis.
3) An increased demand for stock ________ the price.
B) increases
16) If you want recommendations you can
B) open an account at a full-service brokerage firm.
10) Electronic communications networks that allow investors to buy or sell securities is called a(n)
B) over-the-counter market.
8) When aggregate demand by consumers ________, firms produce ________ products to accommodate the demand.
B) rises; more
28) You bought IBM stock at $70 per share. It is now $120 a share. You think it could go higher but you are nervous that it could go down and you would lose your gains. To protect your gains but still give yourself the chance to make future profits you could place a
B) sell stop order at $100 a share.
11) An investment in stock requires all but
D) luck.
14) A ________ trader helps create a market in one or more stocks by taking an opposite position to the orders placed by clients.
D) specialist
14) Fees charged by brokerage firms
D) vary according to the services offered.
2) Some traders, called specialists, help to make a market in stocks by taking the same position as those who want to buy or sell the stock.
F
2) The daily stock quotations found in most large newspapers will not tell you the annual dividends paid per share of stock.
F
4) Economic growth, as measured by increases in the gross domestic product (GDP) signals the start of a bull market where stock prices are bound to rise.
F
5) Stocks are usually bought or sold in round lots, which are multiples of $100.
F
6) The income statement for a company is like a budget in that it shows how much money the company would like to have made in a given accounting period.
F
8) Limit orders can only be placed for a short period of time, usually a week or less.
F
31) A stock purchased at a price of $22 per share, has risen to $46 per share. You wish to avoid losing your profit; therefore, you should put in a sell stop order at a price of
B) $40 per share.
30) You made a $10,000 stock purchase on margin (50%). You put $5,000 into your account initially to cover the purchase. Your stock has declined in value to $7,000 and you receive a margin call. How much cash must you put into your account as a result of the margin call?
A) $1,500
6) If you had 100 shares of CitiGroup, how much would you expect to receive in dividends annually?
A) $176
33) Three hundred shares of stock are purchased on margin at a price of $42 per share plus $150 in brokerage commissions at a time when the margin requirement is 50 percent. How much additional cash would you need to deposit with your broker if the price of the stock dropped to $37 per share?
A) $825
14) Which of the following actions of the U.S. government could not be considered part of fiscal policy?
A) Federal Reserve open market operations
13) A ________ trader is one who executes trades to fulfill orders placed by other investors.
C) floor
9) What was the closing price per share for BlackHills on the day before the trading shown on this listing?
C) $34.61
8) How many shares of Brady A were traded the previous day?
C) 172,300
23) All of the following are odd lots except
C) 200 shares.
13) The yield represents which of the following?
C) Annual return from dividends
11) The demand for which of the following will decrease the most with a weak economy?
C) Boats
8) The ________ is/are not a physical location, but rather an electronic communications network to buy and sell stocks.
C) NASDAQ
6) The stock exchange with the most stringent listing requirements is the
C) NYSE.
16) One of the most commonly used measures of inflation is the
C) consumer price index.
9) Computer systems that match up purchases and sales of stocks even at night when the other exchanges are closed are
C) electronic communication networks.
10) You can currently borrow up to 75% of stock transactions under today's margin rate.
F
2) Interest rates can affect economic growth and therefore have a direct impact on stock prices.
F
1) A discount brokerage firm executes transactions and provides investment advice at a price less than that of full-service brokers.
F
1) The American Stock Exchange (AMEX) is the largest of the physical stock exchanges.
F
7) Approximately how much did Clorox earn per share of common stock during the last year?
D) $6.35
10) Which of the following stocks is the best value considering only the dividend it pays?
D) CitiGroup
25) All of the following online publications provide information about inflation except
D) Consumer Reports.
5) Which of the following is not a reason some investors never purchase stock?
D) They don't want to make better returns.
17) To start an online brokerage account, you need to do all of the following except
D) deposit a minimum number of shares already owned.
1) The most up-to-date quotes of stock prices may be found in The Wall Street Journal.
F
1) Before buying a stock, you should estimate its future market value, just as you would the future value of a car or a home.
T
1) Fiscal policy, the means by which the U.S. government imposes taxes on individuals and corporations and spends its money, has an impact on spending and thus an impact on the stock of some companies.
T
11) When you buy a stock on margin, your gain is magnified if the stock goes up in value.
T
12) A margin call is a request from a brokerage firm for the investor to increase the cash in the account in order to bring the margin back up to the minimum level.
T
2) If you don't need advice or other services offered, you are better off using a discount broker or Internet broker rather than a full-service broker.
T
3) Floor traders on the NYSE are willing to trade stocks for others and earn a commission for doing so.
T
3) In getting recommendations from brokers and analysts, you need to be careful that frequent suggestions to buy or sell are not being made in order to generate revenues for these traders.
T
3) Low interest rates tend to entice investors into the stock market where they can achieve better returns.
T
3) The daily stock quotations found in most large newspapers will tell you the closing price per share of stock for the previous day's trading, the range of prices the stock traded the previous day, and a range of trading prices for the last year.
T
4) NASDAQ has less stringent trading requirements than the organized exchanges and tends to attract newer, high-tech companies.
T
4) On-line trading of stocks is not only less expensive than using traditional brokers, but is usually more convenient too.
T
5) The two parts of a company's balance sheet: (1) assets and (2) liabilities and shareholder's equity, must be equal or in balance.
T
6) An odd lot is the purchase of less than 100 shares of stock.
T
7) A market order is normally executed much more quickly than a limit order.
T
7) Technical analysis and fundamental analysis are methods commonly used by investors to value stocks.
T
9) A stop order is a special form of limit order; it is an order to execute a transaction when the stock price reaches a specified level.
T
35) If you purchase stock ________ you are doing so with a portion of the funds borrowed from your broker.
on margin