Fundamental and Technical Analysis

ABC Corporation has net income of $10,000,000 and 5,000,000 common shares outstanding. ABC Corporation pays out $1,000,000 in dividends annually. ABC Corporation pays an annual dividend per share of: $0.10 $0.20 $5.00 $10.00

$0.20 To determine the dividend being paid per share, divide the $1,000,000 in dividends by the 5,000,000 shares of common stock outstanding. $1,000,000 dividends divided by 5,000,000 shares equals $0.20.

A registered representative is provided with the following financial information concerning a company: Debt of $225 million, par value of the common stock $40 million, paid-in capital of $70 million, and retained earnings of $750 million. The debt-to-equity ratio is: 21% 26% 74% 79%

26% The debt-to-equity is found by dividing the dollar amount of debt (bonds) by the dollar amount of shareholder equity (common stock + paid-in capital + retained earnings). The debt-to-equity ratio is 26% ($225 million / [the par value of the common stock is $40 million + paid-in capital of $70 million + retained earnings of $750 million = $860 million]). The debt-to-equity ratio is used to analyze the capital structure of a company.

An investor has an equity portfolio that consists mainly of domestic companies. If an RR wants to diversify the client's portfolio to include foreign companies, which of the following investment products would MOST closely achieve this goal? A mutual fund that tracks the FTSE Index A mutual fund that tracks the EAFE Index An ETF that tracks the S&P 500 Index A mutual fund that tracks the Wilshire Index

A mutual fund that tracks the EAFE Index

If a mutual fund changes or adds a portfolio manager, the greatest effect would be on the fund's: Expense ratio Alpha Rating Beta

Alpha

A high put/call ratio would MOST likely be associated with a(n): Bullish indicator Bearish indicator Indicator that the market will trade within a narrow range Indicator that the trading volume will be increasing

Bullish indicator

A fundamental analyst, evaluating the common stock of a corporation, will examine all of the following choices, EXCEPT the: Sales of the corporation Management of the corporation Current amount of earnings paid as dividends to shareholders Current amount of short interest positions for the stock

Current amount of short interest positions for the stock

Wireless Communications is offering 2,000,000 common shares (par value $.10) at $15. Which TWO of the following choices describe the financial impact on the company? An increase in paid-in capital A reduction in the long-term debt ratio A reduction in liquidity An increase in fixed assets by $30,000,000 I and II I and IV II and III III and IV

I and II

Which of the following choices represent logical strategies for a technical analyst? Buy calls when a stock breaks through a resistance level Buy calls when a stock breaks through a support level Buy puts when a stock breaks through a resistance level Buy puts when a stock breaks through a support level I and III I and IV II and III II and IV

I and IV

If convertible bondholders convert their bonds into the common stock of a corporation, the effect on the balance sheet of the corporation will be: An increase in current assets A decrease in total liabilities A decrease in stockholders' equity An increase in stockholders' equity I and III only I and IV only II and III only II and IV only

II and IV only

A portfolio composed of five different state G.O. issues will NOT provide an investor with protection from: Economic downturns in specific geographical locations Legislative changes in different states Interest-rate fluctuations Adverse decisions by state courts

Interest-rate fluctuations

When a stock is at its resistance price, a technical analyst will most likely say that it is: Overbought Oversold Inverted Upward slop

Overbought

If a company declares a cash dividend, which of the following is TRUE? Shareholders' equity increases Shareholders' equity decreases Current assets decrease Current assets increase

Shareholders' equity decreases

Which of the following statements about technical analysis is TRUE? The advance-decline index is a good indicator of the strength of a bull or bear market The odd-lot theory states that the small investor is usually right It is bullish when volume is heavy in a declining market and bearish when volume is light in an advancing market A small short interest tends to make for a technically strong market

The advance-decline index is a good indicator of the strength of a bull or bear market

Which of the following items is NOT found by reviewing a company's balance sheet? The dollar value of the inventory The amount of interest paid on the company's bonds outstanding The amount of short-term debt The value of the treasury stock

The amount of interest paid on the company's bonds outstanding