Chapter 14: Investing in Stocks
You purchased Krispy Kreme stock valued at $12,000. Your full-service investment company charges $5 for commission. What is the total cost of the stock purchase?
$12,005
Which of the following must new investors master to become more proficient investors?
-knowing how to use relevant information -knowing where to find relevant information
Samantha wants to sell short stock in ExxonMobil. Rank the steps in the process.
1. She arranges to borrow a stock certificate for a number of shares. 2. Using the borrowed stock, she sells the stock. 3. She buys the same quantity of shares at a lower price. 4. She replaces the stock borrowed to her broker.
When buying stock on margin, the current margin requirement is ______%.
50
Hannah owns 300 shares of "Dirt International." The company does a 3 for 1 stock split. Hannah now has
900 shares
True or false: Net profits will be increased by interest on margined stocks.
False
True or false: Research and evaluation increase the risk associated with stock investments.
False
Corporate dividends for common stock may take the form of cash, additional ______, or company ______.
Stock, Products
The more ______ an investment has to work, the more money it will likely accumulate.
Time
True or false: The first step in selling short stock is to borrow the stock from your broker.
True
True or false: There are alternative sources for stock advisory services.
True
A stock selling ex-dividend will be trading:
at a lower price.
Securities sold at a particular exchange must be first ______, or ______for trading.
availible, product
"Left in the street name" is used to describe investor-owned securities held by a(n) ______ firm.
brokerage
Selling short is selling a stock that has been borrowed from a(n) ______ firm and must be replaced at a later date.
brokerage
You should purchase a ______ option if you believe the price of a stock will increase in a short amount of time.
call
If you think the market price of a stock will increase during a short period of time, you should purchase a:
call option.
Although policies vary, ______ are typically paid on a quarterly basis if they are paid.
dividends
An advantage of being a preferred stockholder is the ability to receive cash ______ payments before common stockholders.
dividends
Companies choose to pay ______ to keep stockholders happy and prosperous.
dividends
One method to avoid the investor's common pitfall of buying high and selling low is to use:
dollar cost averaging.
A company's Web site that can be viewed anytime is:
easily accessible
Beginning investors must find:
good information and know how to use it.
Dollar cost averaging is used to avoid buying ______ and selling ______ .
high, low
A(n) ______ stock is an investment that pays higher-than-average dividends.
income
Investors may choose preferred stock because it offers a predictable source of ______.
income
Stocks that offer larger returns include ______ and potential for losses.
increased risk
A request to buy or sell a stock at a specified price is called a ______.
limit order
The request to buy or sell a stock at the current market value is called a ______.
market order
A daily source of printed material that provides useful information about stocks is a(n):
newspaper
A corporation is under:
no legal obligation to buy back shares from the public.
A network of dealers who buy and sell the stocks of corporations that are not listed on a security exchange is called ______.
over-the-counter market
Fundamental investors will look at many factors when evaluating a company including new ______ development.
product
A ______ is a legal form that requests that stockholders transfer their voting rights to someone within the organization who know the situations of the company better.
proxy
A legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individuals or individual is called ______.
proxy
A ______ date is the date on which a stockholder must be registered in the corporation's books in order to receive dividend payments.
record
A date on which a stockholder must be registered on the corporation's books in order to receive dividend payments is called what?
record date
During the ex-dividend time period, the ______ is entitled to the declared dividend payment.
seller
Selling a stock that has been borrowed from a brokerage firm and must be replaced at a later date is called:
selling short.
A stock ______ is an event in which the shares of stock owned by existing stockholders are divided into a larger number of shares.
split
A stop-loss order is an order to sell a particular stock at the next available opportunity after its ______ price reaches a specified amount.
stock
Corporations don't have to repay the money a stockholder pays for the ______.
stock
An order to sell a particular stock at the next available opportunity after its market price reaches a specified amount is called a:
stop-loss order.
The key element to investing is ______.
time
Most companies like to pay dividends:
to keep investors happy.
The main reason to leave stock certificates with the brokerage firm is:
to make transfers easier upon sale.
