Ch. 12: Investing in Stocks Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. A company's shareholder equity at the end of the year is $20,000. It has to pay its preferred stock shareholders $10,000. The company issued a total of 10,000 shares. How much is each share worth?

Question 2 2. Who gets to vote at a shareholder's meeting?

Question 3 3. What's the difference between a person acting as a broker as opposed to a dealer?

Question 4 4. Which of the following agencies regulates the trading of stock?

Question 5 5. Which of the following would be a reason for a stock's dividend yield to increase (assuming all other variables remained constant)?

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Question 6 6. Stocks are _____.

Question 7 7. What is a benefit to owning preferred stock over owning common stock?

Question 8 8. Compute the annual dividend paid by a stock that has a current share price of $25.00 and a dividend yield of 5%.

Question 9 9. What is the purpose of stock valuation?

Question 10 10. What do you call a person who owns stock in a company?

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Question 11 11. Compute the dividend yield for a stock that pays a $2.50 annual dividend and has a current share price of $100.00.

Question 12 12. What is a dividend?

Question 13 13. Which is the most important document that should be read to ensure an informed decision is being made regarding preferred stock?

Question 14 14. Company A is giving stockholders dividends of $4 per stock. How much in dividends does Joe get if Joe has 30 preferred stocks in this company?

Question 15 15. What's the best explanation of a primary securities market?

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Question 16 16. Which of the following statements is true of two-stage stock valuation methods?

Question 17 17. What is a dividend?

Question 18 18. Select the scenario that produced the largest profit.

Question 19 19. Which of the following is sold on a securities market?

Question 20 20. Bonnie has three stocks which generate expected annual dividend income of $4,500. Her current portfolio value is $125,000. What is her portfolio yield?

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Question 21 21. What is the payment shareholders receive from companies called?

Question 22 22. Betty decides to invest in a stock because she believes that the company is in a good financial position and its stock will increase in value over time. What type of stock position is she taking on the company?

Question 23 23. Name two types of preferred stock.

Question 24 24. Why would a company want an investment bank to underwrite an initial public offering versus using the best-efforts basis?

Question 25 25. How would an investment bank help a company raise funds in the secondary securities market?

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Question 26 26. What are the two main types of stock?

Question 27 27. Thinking back to the dividend yield formula, which of the following would be a reason for a stock's dividend yield to decrease (assuming all other variables remained constant)?

Question 28 28. What advantage does the common stock shareholder have over the preferred stock shareholder?

Question 29 29. Gordon believes a company's stock is going south. He gets his broker to loan him 1,000 shares at the current price of $100 per share. He sells the shares for $100,000, waits for the stock to drop like a rock to $75 per share and buys the shares back for $75,000. He gives the shares to his broker and pockets $25,000 in profits. What did Gordon just do?

Question 30 30. Adjustable-rate preferred stock is:

Ch. 12: Investing in Stocks Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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