Exam 4 FINANCE

David invested $18,000 in the American Funds Euro-Pacific Growth fund. This fund charges a sales charge of 6.22%. What is the dollar amount of the sales charge to purchase shares?

$1,119.60

Using the information given here, what is the price-earnings ratio for DEF Company? (Hint: This is a two-step calculation.) Earnings = $180,000 Number of shares outstanding = 60,000 Price per share = $30 Book value per share = $10

$10

If a bond is quoted in the newspaper at 105, what is its price?

$1050

Crystal Ventures Mutual Fund contains stocks and securities valued at $476 million. The fund has liabilities that total to $6.3 million and the fund has issued 31 million shares. What is the Net Asset Value?

$15.15

Smith Corporation declared a quarterly dividend of $0.67 per share to stockholders. The record date is Friday, April 8th, the ex-dividend date is Wednesday, April 6th, and the payable date is Monday, May 9th for this dividend. If Samantha owns 250 shares of Smith stock on Friday, April 8th, what is her quarterly dividend amount?

$167.50

Gregory bought 500 shares of stock at a price of $60 per share. He later sold his stock at a price of $56. What was his total return on his investment?

$2,000 Capital Loss

Angela believes that Beamer Corporation's stock will drop in value. She borrows 150 shares from a brokerage firm when the stock was selling at $42 per share. When the stock's price dropped to $27 per share, she told the brokerage firm to buy 150 shares of Beamer stock. This stock was returned to the brokerage firm in replace of the stock she first borrowed. What is Angela's profit on her short selling investment?

$2,250

Lesley purchased 250 mutual fund shares at $18 per share. Lesley decided to sell her shares after the price increased to $29 per share. What is Lesley's capital gain?

$2,750

Using the information given here, what are the earnings per share for GHI Company? Number of shares outstanding = 150,000 Price per share = $60 Book value per share = $20 Earnings = $375,000

$2.5

Taliyah invested $21,000 in the American Funds Euro-Pacific Growth fund. This fund charges a sales charge of 4.35%. What is the net amount available for investment?

$20,086.50

If you bought stock using dollar cost averaging as listed here, what was your average cost? June 15 $50 1.75 shares July 15 $50 1.65 shares August 15 $50 2.00 shares

$27.78

Using the information given here, what are the earnings per share for DEF Company? Number of shares outstanding = 60,000 Price per share = $30 Book value per share = $10 Earnings = $180,000

$3

The investments in the Alamo Basics Contingency Fund have a current market value of $800 million. The fund also has liabilities that total $60 million. If this mutual fund has 20 million shares, what is the net asset value per share?

$37

Kerri believes that Bluebill Corporation's stock will drop in value. She borrows 200 shares from a brokerage firm when the stock was selling at $56 per share. When the stock's price dropped to $31 per share, she told the brokerage firm to buy 200 shares of Bluebill's stock. This stock was returned to the brokerage firm in replace of the stock she first borrowed. What is Kerri's profit on her short selling investment?

$5,000

Olivia currently has the money to purchase only 75 shares of Tumble Corporation. Tumble's shares are currently selling for $82 per share. If Olivia uses the current margin requirements to purchase 150 shares of Tumble stock, what is the amount of money that she personally has invested in the company?

$6,150

Nicholas purchased 150 shares of ABC Mutual Fund at $10.50 and sold them one year later at a price of $14.50. His total capital gain was

$600

Hannah purchased 65 shares of Best Buy stock at $36 per share. After 3 years, Hannah sold the stock for $43 per share. During the time she held the stock, Hannah received the dividends totaling $4.00 per share. What is Hannah's total return?

$715

Alan currently has the money to purchase only 125 shares of Hurricane Corporation. Hurricane's shares are currently selling for $34 per share. If Alan uses the current margin requirements to purchase 250 shares of Hurricane stock, what is the amount of the total investment?

$8,500

Book value equals

(assets - liabilities) / number of shares outstanding

Nicholas initially invested $2,400 in a technology company. The company recently paid annual dividends of $22 and his year-end investment value was $2,000. What was the rate of return on his investment?

-15.75%

Given the information shown here for NMOP Inc., calculate the dividend yield. Annual dividend = $4.00 Number of shares outstanding = 40,000 Current market price per share = $40.00 Book value per share = $8.00

10%

If you bought a stock on July 1, 2016, and sold it on July 15, 2016, you may be a(n)

2 of these are correct

Greg initially invested $7,000 in a transportation company. The company recently paid annual dividends of $86 and his year-end investment value was $8,340. What was the rate of return on his investment?

20.37%

Assume that you purchase a $1,000 bond issued by Kohls that pays 8% interest each year, paid every 6 months. What is the amount of each interest payment?

40

A _____________ is an employer-sponsored retirement account, and participating in one is one of the easiest ways to begin an investment program.

401(K) account

How is an ETF similar to a closed-end fund?

All of these are correct

An example of a lifecycle fund is a fund that

Assists investors with planning for retirement by a specific date.

All of the following are true of capital gains distributions, except:

Capital gains distributions are commonly paid twice a year.

According to the video, what are the other fees that fund investors must consider in addition to a load charge?

Contingent Deferred Sales Load and Management Fee

Which of the following determine the prices for shares for closed-end funds?

Factors of supply and demand, Value of stocks and other investments contained in the fund's portfolio, and Investor expectations

Ethan wants to purchase some stock for the first time. Which of the following is correct?

His commission should be lower at an online broker than at a full-service broker.

All of the following are ways that investors can make money by investing in closed-end funds, exchange-traded funds, or open-end funds:

Income Dividends, Capital Gains Distributions, and Capital Gains

Which of the following statements is FALSE?

Individual investors who purchase U.S government securities must hold the investments until maturity

Which of the following is true about mutual funds and taxes?

Investment companies are required to send each shareholder a year-end statement that specifies how much each received in dividends and capital gain distributions.

All of the following are considered characteristics of Treasury Notes, except:

Maturities for treasury notes can range from a few days to one year

Annual reports

May be sent to all stockholders on an annual basis

Which of the following describes a growth company?

Profits are reinvested in the company for future growth.

Megan decided to start investing in stocks. Which of the following should she do first?

Research the corporations she is interested in as well as their industries.

All of the following are considered characteristics of Treasury Bills or T-Bills, except:

T-Bills are sold in maximum units of $500

Which of the following is correct for a closed-end fund?

The price of its shares is determined by supply and demand, by the value of stocks in the portfolio, and by investor expectations.

Melinda wants to withdraw some money from her mutual fund. She has a minimum required asset value of $10,000. Which of the following is not an option available for her to systematically withdraw some money?

Withdraw all principal and leave interest dividends and capital gain distributions in the account

The opportunity, but not the obligation, to buy a security within a specified period of time at a guaranteed price is

a call option

The opportunity, but not the obligation, to sell a security within a specified period of time at a guaranteed price is

a put option

According to the video, in order to make money by selling short, what must you be correct in predicting?

a stock will decrease in value

All of the following can be factors that influence business failure risk except

all of these

Corporations use bonds

all of these

How do mutual funds provide returns to their shareholders?

all of these

If you start a new job and are offered the opportunity to participate in the company's 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?

all of these decisions can affect

Which of the following is some of the information found on a financial website such as Yahoo! Finance?

all of this information is included

Dividend yield equals

annual dividend amount/ current price per share

Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?

asset allocation funds

Investors who earn larger returns because they borrow part of the money needed to by a particular stock are using which of the following techniques?

buying on margin

When you sell your shares in a mutual fund, you may receive a profit that results from an increase in value called

capital gain

Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are

capital gain distributions

Hammerhead Corporation declared a quarterly dividend of $0.84 per share to stockholders. The record date is Friday, March 11th, the ex-dividend date is Wednesday, March 9th, and the payable date is Monday, April 11th for this dividend. Chris purchased 50 shares on January 1st, Adam purchased 100 shares on March 8th, and Emma purchased 65 shares on March 10th. Who is eligible to receive this quarterly dividend?

chris and adam

Excessive buying and selling of securities to generate commissions is called

churning

Which type of fund has the prices determined by factors of supply and demand like the prices of a stock?

closed-end fund

After you purchase an investment, you should

continually evaluate your investment

All of the following are true of convertible corporate bonds, except:

convertible bonds are backed only by the reputation of the issuing corporation

Monitoring the ___________________ will tell an individual whether the investment is increasing or decreasing in value.

current values

A distribution of money, stock, or other property that is paid to the stockholders of a company is called a

dividend

This calculation uses the current price per share and the annual amount of money paid to investors from the company.

dividend yield

According to the video, what should be on the left side of an investment value graph?

dollar amounts

A fancy way of saying you need to diversify your investments is

don't put all of your eggs in one basket

If you hold mutual fund shares in your Roth individual retirement account, the taxes on reinvested income will be

eliminated

Which of the following types of stock funds invests in stock issued by companies with a long history of paying dividends?

equity income funds

Which of the following is defined as the date when a stock trades "without dividend" and the seller is entitled to a declared dividend payment?

ex-dividend date

All of the following are true of high-yield bonds, except:

high-yield bonds have a lower risk of default

The principal or face value of Treasury Inflation-Protected Securities (TIPS) _____________ with inflation and interest payments ______________ with inflation.

increase; increase

Which of the following types of stock funds invests in the same companies included in the Standard & Poor's 500 stock index?

index funds

Which of the following risks associated with preferred stocks or government or corporate bonds is a result of changes in rates in the economy?

interest rate risk

Which of the following provides up-to-date information that can help investors made decisions quickly without having to make a trip to the library?

internet

According to the video, what should be placed near the middle of an investment value graph?

investment price

When investing, in your role as an investor you should not

let the investments manage themselves

Devin wants to purchase DEF stock for a specified price of $40.00 or less, and he understands this request will be executed after all previously received orders have been fulfilled. He should use a

limit order

If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investment's value, you are most concerned with

liquidity

Level Four Investments include all of the following, except:

low-risk investments

Sally wants to invest in a fund that invests only in stock. Which of the following will meet her needs?

midcap funds

All of the following are true of mortgage bonds, except:

mortgage bonds are less secure than other types of corporate bonds

Earnings per share equals the

none of these

Whose shares are issued and redeemed by the investment company at the request of investors?

open-end fund

Inflation risk deals with

reduction in purchasing power

Which of the following types of stock funds invest in stock traded within one specific region of the world?

regional funds

A bond that is repaid from the income generated by the project it is designed to finance is called a(n)

revenue bond

Although Level Two Investments are more speculative than Level One Investments, the primary goal is to choose investments that provide _____________ and ______________.

safety; income

The NYSE is an example of a(n)

securities exchange

Bonds of a single issue that mature on different dates are called ____________ bonds.

serial

What are the risks associated with using the margin strategy?

stock decreases in value, margin calls, and loan repayment and interest

Which of the following is not one of the four components of the risk factor to be considered when evaluating investments?

stock risk

Which of the following has returned an average of almost 10% per year since 1926?

stocks

If you can leave your funds alone for 5-10 years or more, which of the following investments would be most appropriate?

stocks and mutual funds

If you need access to your funds in two years or less, which of the following investments would be least appropriate?

stocks and mutual funds

Gavin has owned MNOP stock for several years and has seen the stock increase in value from $20 to $35. He wants to "lock in" his gains, so he needs to place an order that will sell his stock at the next available opportunity after its market price drops to $33. What kind of order should he use?

stop-loss order

Interest paid to corporate bond owners is

tax-deductible for the corporation

Which types of companies (as discussed in the video) are considered growth investments?

technology companies

All of the following are true of open-ended funds, except:

the major disadvantage of open-ended funds is the cost of buying and selling shares

This calculation includes the yearly dividends in dollars plus the increase in the original purchase price of the investment.

total return

Which of the following steps should be completed before making your first investment?

work to balance your budget

Total return equals

yearly dividends in dollars plus capital gains