Question 1

All of the following are stock market indexes except

Accepted Answer

A)   the Dow Jones Industrial Average.
B)   the Standard & Poor's 500.
C)   the Russell 100.
D)   the Wilshire 5000.E) None of the above
F) A) and B)

Question 2

Compare and contrast the Dow Jones Industrial Average and Standard & Poor's 500-Stock Index.

Accepted Answer

The Dow attempts to gauge the well-being...

Question 3

Is a positive stock split good for the current share holders?

Accepted Answer

Yes,for the most part a positive stock s...

Question 4

The letters or characters that represent a stock is known as the stock's

Accepted Answer

A)   ticker.
B)   code.
C)   acronym.
D)   share.E) All of the above
F) C) and D)

Question 5

A proxy vote means

Accepted Answer

A)   filling out a voting form and having a representative turn it in for you.
B)   requesting that your vote be deferred until a later date.
C)   giving a representative the right to vote in your place.
D)   none of the above.E) C) and D)
F) None of the above

Question 6

Returns on stocks can come in the form of capital appreciation.

Accepted Answer

A) True 
 B)False

Question 7

The Dow Jones Industrial Average has been an index since what year?

Accepted Answer

A)   1796
B)   1896
C)   1996
D)   2006E) C) and D)
F) None of the above

Question 8

You have just purchased 10 shares of a stock selling at $50 per share.Since that time,the company was found to be in violation of several environmental laws and has several major lawsuits outstanding.Which of the following statements is most correct?

Accepted Answer

A)   You could lose up to your $500 investment.
B)   You could lose more than your $500 investment.
C)   You cannot lose your investment based on the actions of the company.
D)   By owning stock in the company, you have also technically violated the law.
E)   None of the aboveF) A) and B)
G) A) and C)

Question 9

The discounted dividends valuation model of common stock assumes that dividends will grow at a constant rate forever.This method tells us that the (dividend next year) divided by the (required rate of return - growth rate) yields the

Accepted Answer

A)   discounted dividend.
B)   dividend growth rate.
C)   value of the common stock.
D)   value of the earnings.
E)   value of the P/E ratio.F) C) and E)
G) A) and E)

Question 10

The S&P 500

Accepted Answer

A)   is the oldest and most widely quoted of the stock indexes.
B)   is a narrower index than the DOW.
C)   includes some stocks from the OTC market.
D)   all of the aboveE) A) and D)
F) A) and B)

Question 11

ComChip is a computer chip manufacturer.Its stock is selling at $50 per share and earnings are $2 per share.What is the stock's P/E ratio?

Accepted Answer

A)   50.00
B)   45.80
C)   25.00
D)   27.78
E)   22.50F) B) and C)
G) B) and E)

Question 12

A stock currently selling for $105 with estimated earnings per share of $5.25 would have a P/E ratio of

Accepted Answer

A)   10.
B)   12.
C)   20.
D)   28.
E)   30.F) A) and E)
G) A) and D)

Question 13

If you wanted information about how the entire stock market is performing,which index would provide you with information on virtually all types and sizes of companies?

Accepted Answer

A)   Dow Jones Industrials
B)   S&P 500
C)   NASDAQ 100
D)   Wilshire 5000E) A) and B)
F) A) and C)

Question 14

What would you expect to be associated with a company whose stock has a high beta?

Accepted Answer

A)   A high potential return
B)   A high dividend yield
C)   A large market capitalization
D)   All of the above are correct.
E)   All but C are correct.F) All of the above
G) A) and B)

Question 15

You purchased 100 shares of Quantex at $150 per share for a total investment of $15,000.After your purchase the stock had a 3 for 1 split.How many shares do you now own and how much is your original investment now worth?

Accepted Answer

A)   100 shares and $150 dollars
B)   300 shares and $15,000 dollars
C)   100 shares and $45,000 dollars
D)   300 shares and $45,000 dollarsE) All of the above
F) A) and B)

Question 16

Dividends

Accepted Answer

A)   are always paid, regardless of the company's profitability.
B)   are always paid when the company makes a profit.
C)   are never paid to common stockholders; only preferred stockholders receive them.
D)   None of the above is true.E) All of the above
F) None of the above

Question 17

A ________ is a measure of the performance of a group of stocks that represent the market or a sector of the market.

Accepted Answer

A)   stock market index
B)   stock grouping
C)   market composite
D)   portfolio return
E)   none of the aboveF) B) and C)
G) A) and C)

Question 18

You and a group of your friends have been discussing your portfolios at the company water cooler.Your discussion has centered on how your stocks are moving up or down in price relative to the market as a whole.Each stock's ________ is likely the best measure of the relationship.

Accepted Answer

A)   relative index
B)   beta
C)   alpha
D)   delta
E)   none of the aboveF) C) and E)
G) None of the above

Question 19

Can you explain the risk-return trade-off with common stocks?

Accepted Answer

Stocks have more risk than other investm...

Question 20

Stocks reduce risk by portfolio rebalancing.

Accepted Answer

A) True 
 B)False

Exam 12: Investing in Stocks

A proxy vote means

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Returns on stocks can come in the form of capital appreciation.

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All of the following are stock market indexes except

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The letters or characters that represent a stock is known as the stock's

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Can you explain the risk-return trade-off with common stocks?

Correct AnswerverifiedStocks have more risk than other investm...View AnswerShow Answer

Is a positive stock split good for the current share holders?

Correct AnswerverifiedYes,for the most part a positive stock s...View AnswerShow Answer

What would you expect to be associated with a company whose stock has a high beta?

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The S&P 500

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Dividends

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The Dow Jones Industrial Average has been an index since what year?

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You purchased 100 shares of Quantex at $150 per share for a total investment of $15,000.After your purchase the stock had a 3 for 1 split.How many shares do you now own and how much is your original investment now worth?

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ComChip is a computer chip manufacturer.Its stock is selling at $50 per share and earnings are $2 per share.What is the stock's P/E ratio?

Correct AnswerverifiedShow Answer

If you wanted information about how the entire stock market is performing,which index would provide you with information on virtually all types and sizes of companies?

Correct AnswerverifiedShow Answer

The discounted dividends valuation model of common stock assumes that dividends will grow at a constant rate forever.This method tells us that the (dividend next year) divided by the (required rate of return - growth rate) yields the

Correct AnswerverifiedShow Answer

A stock currently selling for $105 with estimated earnings per share of $5.25 would have a P/E ratio of

Correct AnswerverifiedShow Answer

You and a group of your friends have been discussing your portfolios at the company water cooler.Your discussion has centered on how your stocks are moving up or down in price relative to the market as a whole.Each stock's ________ is likely the best measure of the relationship.

Correct AnswerverifiedShow Answer

Stocks reduce risk by portfolio rebalancing.

Correct AnswerverifiedShow Answer

You have just purchased 10 shares of a stock selling at $50 per share.Since that time,the company was found to be in violation of several environmental laws and has several major lawsuits outstanding.Which of the following statements is most correct?

Correct AnswerverifiedShow Answer

Compare and contrast the Dow Jones Industrial Average and Standard & Poor's 500-Stock Index.

Correct AnswerverifiedThe Dow attempts to gauge the well-being...View AnswerShow Answer

A ________ is a measure of the performance of a group of stocks that represent the market or a sector of the market.

Correct AnswerverifiedShow Answer

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Stocks have more risk than other investm...
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Yes,for the most part a positive stock s...
View Answer

Correct Answer
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The Dow attempts to gauge the well-being...
View Answer

Correct Answer
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