LearnSmart Ch 8

If you buy 100 shares of ABC stock at $5 per share, your total investment is ___

$500 [100 × $5 = $500]

What will the dividend income be on 1,000 shares of XYZ stock if XYZ distributes a $.20 per share dividend?

$200 [$.20 × 1,000 = $200]

Which of the following are ways to make money by investing in stocks?

Dividends Capital gains

Which of the following is true of the average return on the stock market?

It is compared with the returns on other securities.

Which of the following is true of the definition of risk?

There is no universally agreed-upon definition.

If you buy a stock for $10 and later sell it for $16, you will have a

capital gain of $6. [Capital gain = selling price - purchase price = $16 - $10 = $6]

When a company declares a dividend, shareholders generally receive

cash.

Dividends are the ______ component of the total return from investing in a stock.

income

The dividend yield for a one-year period is equal to the annual dividend amount divided by the

stock price at the beginning of the year.

In the Ibbotson-Sinquefield studies, year-by-year real returns can be calculated by

subtracting annual inflation.