3.01 Sources of Securities Info.
Which information is a person unable to obtain from a stock table?
A. the daily volume
B. the yearly price range of the stock
C. whether the stock price is up or down
D. breaking news affecting the company that day
D. breaking news affecting the company that day
Sammy received one share of stock in Nike, Inc., as a gift. He wondered how much of the company profit went to his single share, so he divided the net income by the number of outstanding shares of common stock. What common ratio did Sammy calculate?
A. gross profit margin
B. earnings per share
C. return on equity
D. price-earnings
B. earnings per share
Which statement is true about assessing the fundamentals of a security?
A. Fundamental analysis results in a reliable prediction of the stock price for the next year.
B. Fundamental analysis is a complicated procedure that is inappropriate for beginning investors.
C. Even investment experts disagree about the most important ratios to consider in fundamental analysis.
D. The only valid approach to fundamental analysis is based on the work of investment guru Warren Buffett.
C. Even investment experts disagree about the most important ratios to consider in fundamental analysis.
Which type of stock comes with voting rights?
A. income
B. common
C. preferred
D. small cap
B. common
Kent wants to learn as much as possible about the mutual fund that he is considering as an investment. Which is the best place he could go for detailed information?
A. newspaper
B. trade magazine
C. mutual fund website
D. mutual fund prospectus
D. mutual fund prospectus
Which document is different from a standard financial statement?
A. balance sheet
B. shareholder sheet
C. income statement
D. cash flow statement
B. shareholder sheet
Which is an important business factor to consider when choosing an investment?
A. time horizon
B. risk tolerance
C. minimization of taxes
D. comparison to competition
D. comparison to competition
For assessing the value of a stock, which represents an invalid qualitative factor to consider?
A. staying on top of trends
B. offering more healthful food
C. employing experienced managers
D. paying the CEO a reasonable amount
B. offering more healthful food
Which best describes a marketable bond?
A. one that is bought and sold in the open market
B. one that later becomes a stock at a market
C. one that comes from a governing body
D. one that is paid back before maturity
A. one that is bought and sold in the open market
A place where investors can trade securities that have been issued by a corporation is known as a/an:
A. primary market.
B. secondary market.
C. stock market index.
D. initial public offering.
B. secondary market.
Which item should be placed in the liabilities section on a company balance sheet?
A. cash
B. buildings
C. inventory
D. employee wages
D. employee wages
When investing to reach a goal within three years, one invests toward a/an:
A. long-term time horizon.
B. short-term time horizon.
C. risk-tolerant time horizon.
D. intermediate-term time horizon.
B. short-term time horizon.
Ratios are calculated by:
A. multiplying or dividing, depending on the ratio.
B. adding or subtracting, depending on the ratio.
C. multiplying one number by another.
D. dividing one number by another.
D. dividing one number by another.
Mutual funds that contain both stocks and bonds are known as:
A. exchange-traded funds.
B. money market funds.
C. balanced funds.
D. index funds.
C. balanced funds.
Jamie owned 300 shares in a certain company, worth $10 per share. The company recently announced that his 300 shares would become 600 shares, worth $5 per share. This is an illustration of:
A. capital appreciation.
B. a stock exchange.
C. a stock split.
D. dividends.
C. a stock split.
What does an income statement show about a company over a period of time?
A. equity
B. liabilities
C. profitability
D. reliability
C. profitability
Which factor should have the least influence on a person's investment choices?
A. age
B. marital status
C. current income
D. financial decisions of one's parents
D. financial decisions of one's parents
When Staci is told to “consider the cost” before selling an investment, she is being advised to:
A. estimate the effect of commissions and tax costs on her transaction.
B. review every one of the costs she has incurred thus far.
C. calculate the costs of prior transactions.
D. negotiate for a better, cost-saving deal.
A. estimate the effect of commissions and tax costs on her transaction.
Which is considered a reliable bond?
A. callable
B. corporate
C. government
D. puttable
C. government
Since John wants to know the bond’s interest rate, he needs to look at the bond’s:
A. issuer.
B. coupon.
C. maturity.
D. par value.
B. coupon.
3.04 Acquire Knowledge of Securities
Which is a disadvantage of investing in bonds?
A. low returns
B. meeting long-term goals
C. offering unmatched reliability
D. performing well when the economy is poor
A. low returns
Which is least likely to be a valid reason for making a significant change in a personal asset allocation?
A. marriage
B. birth of a child
C. new car purchase
D. large shift in inflation
C. new car purchase
The PEG ratio is unique because it incorporates price, earnings, and:
A. gross profit.
B. gross sales.
C. growth of EPS.
D. growth rate of earnings.
D. growth rate of earnings.
A bond's profit or loss over a period of time at a particular amount is called the:
A. yield.
B. liquidity.
C. maturity.
D. bid price.
A. yield.
Darron is investigating a few corporate bonds for investment. He wants to know how likely it is that the corporations will pay back what they have borrowed. Darron needs to look at the:
A. issuer.
B. bid price.
C. bond rating.
D. coupon rate.
C. bond rating.