Chapter 14 practice Test

Chapter 14 practice Test - 11/3/11 Blackboard Learning...

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Unformatted text preview: 11/3/11 Blackboard Learning System < Your |0cation: Assessments > View All Submissions > View Attempt View Attempt 1 of unlimited Title: CHAPTER 14 PRACTICE TEST Started: November 3, 2011 10:09 AM Submitted: November 3, 2011 10:55 AM Time spent: 00:45:55 Total score: 35/37 = 94.5946% Total score adjusted by 0.0 Maximum possible score: 37 Done Amy Farmer just received a legal form in the mail from a firm in which she owns stock. This form lists the issues to be decided at the annual stockholders' meeting and asks her to give written permission for someone else to vote for her if she cannot attend. What form has she received in the mail? Student Value CorrectAnswer Feedback Response A. equity E B. proxy 100% Q C. voting rights D. dividends E. call option Score: 1/1 Comments: Christopher Pratt just bought shares of common stock. Which one of the following is he entitled to based on his ownership of these shares? Student Value CorrectAnswer Feedback Response A. semi- annual interest payments B. guaranteed annual dividends E C. right to 100% :3 vote on major corporate webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 1I20 11/3/11 Blackboard Learning System issues D. right to declare a stock split E. right to declare future dividends Score: 1/1 Comments: Valerie Kilrner owns stock in the Williams Widget Company. She was just advised that in the near future she will be receiving two shares for every one share she owns today. What has the company declared that will cause this change to her shares? Student Value CorrectAnswer Feedback Response A. extra dividend B. capital gains distribution E C. stock split 100% {3 D. stock repurchase E. stock conversion Score: 1/1 Comments: Orlando Blodgett is buying stock in the Getaway Caribbean Cruise Company today. He had thought about buying the stock yesterday and if he had, he would have received this quarter's dividend. However, since he waited until today, he will not receive that dividend payment. Given this information, which one of the following dates applies to this stock today? Student Value CorrectAnswer Feedback Response A. record date 3, B. ex- 100% Q dividend date C. payment date webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 2/20 11/3/11 Blackboard Learning System D. stock split date E. stock repurchase date Score: 1/1 Comments: 5. Arnell Johnson bought 200 shares of Black Petroleum Company for $95 per share and paid a commission of $60. He sold the stock five years later for $120 per share and paid $75 commission. While he held the stock, it paid a dividend of $5.50 per share. What was Arnell's total dollar return on this stock? Student Value Correct Answer Feedback Response A. $5,000 B. $4,865 C. $1,100 D. $6,100 E E. $5,965 100% {3 General Total return = 200($120 + 5.50 - 95) - ($60 + 75) = $5,965 (Change as shown.) Feedback: Score: 1/1 Comments: 6. Gaby Williams is thinking about buying some stock but wants some protection should the issuer miss paying a dividend payment. Which one of the following features would help provide this protection? Student Value Correct Answer Feedback Response A. convertible B. callable E C. cumulative 100% {3 D. cancellable E. common Score: 1/1 Comments: 7. To raise capital, many corporate financial managers prefer selling common stock because: webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 3/20 11/3/11 Blackboard Learning System Student Value Correct Feedback Response Answer A. it doesn't have to be repaid until 10 to 15 years after it has been issued. B. interest payments to stockholders are lower than interest paid to a bank. C. common shareholders have no voting rights. D. interest paid to stockholders is tax deductible. E E. the money 100% [5 obtained from stockholders does not have to be repaid. Score: 1/1 Comments: Equity financing is a popular choice to provide long-term financing for a corporation because: Student Value CorrectAnswer Feedback Response A. a lender is always available to provide this type of financing. E B. it does 100% Q not have webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 4/20 11/3/11 Blackboard Learning System to be re aid. C. re ayment doesnT have to be made for ten years or more. D. only interest must be paid for the first five years. E. it does not cost anything to sell in the primary market. Score: 1/1 Comments: Which one of the following statements is true? Student Value Correct Feedback Response Answer A. Corporations are required by law to report all activities to their stockholders each month. E B. Stockholders 100% Q must approve major changes to corporate policies. C. Stockholders must approve the sale of all goods and services by the webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 5/20 11/3/11 Blackboard Learning System D. E8Pdterl/ibns are required by law to have two stockholder meetings each year. E. Stockholders may vote only by proxy. Score: 1/1 Comments: 10. Dividends remain with the stock until: Student Value CorrectAnswer Feedback Response E A. two 100% [3 business days before the date of record. B. two business days after the date of record. C. three days before the date of record. D. three days after the date of record. E. three days before the actual payment date. Score: 1/1 Comments: 11. webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 6/20 11/3/11 Blackboard Learning System Jo Bower purchased 150 shares of stock for $24 a share and sold it for $30 a share. The commissions required to buy and sell her stock totaled $120. Assuming she received no dividends during the time she owned the stock, what is her total return on this investment? Student Value CorrectAnswer Feedback Response $600 $780 10090 :3 $900 $2,400 E.$3,000 General Total return = 150($30 - 24) - $120 = $780 Feedback: Score: 1/1 Comments: POP"? 12. If the board of directors approves a two-for—one stock split, an investor who owns 150 shares before the split will own shares after the split. Student Value CorrectAnswer Feedback Response A. 75 B. 150 C. 225 D. 300 100% Q E. 450 B General After-split shares = 150 x 2 = 300 shares Feedback: Score: 1/1 Comments: 13. A very safe investment that generally attracts conservative investors is called a(n) stock. Student Value CorrectAnswer Feedback Response penny . cyclical growth small cap blue chip 100% Q 0.0.003? E webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 7/20 11/3/11 Blackboard Learning System Score: 1/1 Comments: 14. A stock that remains stable during declines in the economy is called a(n) stock. Student Value CorrectAnswer Feedback Response E] A. defensive 100% Q B. cyclical C. growth D. income E. blue-chip Score: 1/1 Comments: 15. A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) stock. Student Value CorrectAnswer Feedback Response . defensive . cyclical growth 100% Q income El rnpoou> blue-chip Score: 1/1 Comments: 16. Which one of the following is a true statement? Student Value Correct Answer Feedback Response A. When choosing a stock advisory service that charges fees for webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 8/20 11/3/11 17. Score: their investment advice, the quality of the information is always excellent. . Mergent's Investors Service only provides information about bonds. . Value Line provides information about bonds and mutual funds, but not common stocks. The information provided by investors' services consists of simple alphabetical listings only. . Online 100% computer services may be used to research companies and to obtain current stock prices. Comments: Anthony Edwards wants to diversify his portfolio by adding a stock that maintains a stable [:1 webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct Blackboard Learning System 1/1 9/20 11/3/11 Blackboard Learning System value when the economy declines. What type of stock does Anthony want to add to his portfolio? Student Value CorrectAnswer Feedback Response E] A. defensive 100% Q stock B. cyclical stock C. small-cap stock D. blue-chip stock E. growth stock Score: 1/1 Comments: 18. Sean Barber wants to invest in a stock that is relatively safe, suitable for conservative investors, and less speculative than other stocks. What type of stock best fits Sean's requirements? Student Value CorrectAnswer Feedback Response A. midcap stock B. cyclical stock C. small-cap stock E] D. blue-chip 100% Q stock E. growth stock Score: 1/1 Comments: 19. Which one of the following statements is false? Student Value CorrectAnswer Feedback Response A. Numerical measures can help webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 10l20 11/3/11 20. Score: investors decide if it is time to buy or sell stock. uture earnings may be one of the most significant measures to examine when evaluating a stock. . Higher earnings generally equate to higher stock value. . Corporate earnings are reported in a firm's annual report. . To date, 100% it is impossible to determine corporate earnings by using the Internet. Comments: Barker Creek Clothing has after-tax income of $12.8 million. It also has 32 million shares of stock outstanding. What is the firm's earnings per share? A. B. Student Value Response $4.48 $3.20 Blackboard Learning System [3 1/1 Correct Answer Feedback webctap.gardner—webb.edul. . .lcobaltMainFrame.dowebct 11/20 11/3/11 Blackboard Learning System C. $1. 28 E D. $0.40 100% :3 E. $0.80 General Earnings per share = $12.8 million/32 million = $0.40 Feedback: Score: 1/1 Comments: 21. Last year, High-Tech Electronics earned $1.50 per share. If the current market value for a share of stock is $45, what is the firm's P/E ratio? Student Value CorrectAnswer Feedback Response 0.03 3.30 30.00 100% :3 33.00 52 .0093? E. 45.00 General Feedback: P/E = $45/$1.50 = 30 Score: 1/1 Comments: 22. Acme Widget, Inc. has one million shares of common stock outstanding at a price per share of $85. The company earned $5 million after taxes. The annual dividend is $3.50 per share. The firm has assets of $125,000,000 and liabilities of $25,000,000. What is the dividend yield? Student Value CorrectAnswer Feedback Response A. 3.50 percent B. 1.43 percent C. 5.00 percent E D. 4.12 100% :3 percent E. 3.44 percent General Yield = $3.50/$85 = 4.12 percent Feedback: webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 12/20 11/3/11 Blackboard Learning System Score: 1/1 Comments: 23. Becky Martinez paid $65 a share for stock in GBX Corporation. The stock has a current market value of $48 a share and pays $1.60 a year in dividends. What is the dividend yield? Student Value CorrectAnswer Feedback Response A. 2.5 percent B. 7.4 percent E C. 3.3 100% [3 percent D. 30.0 percent E. 40.0 percent. General Yield = $1.60/$48 = 3.3 percent Feedback: Score: 1/1 Comments: 24. Assume that you purchased 100 shares of a stock for $55 a share, that you received an annual dividend of $2.00 a share, and that you sold your stock for $65 a share at the end of one year. What is the total return on your investment? (Ignore commission amounts for this question. Student Value CorrectAnswer Feedback Response $200 $1,000 $1,200 100% [3 $1,500 E. $2,200 General Total return = 100($65 + 2 - 55) = $1,200 Feedback: Score: 1/1 Comments: 52 9.0.07? 25. A yield calculation that takes into account the total return, the original investment, and the time that the investment is held is called yield. webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 13/20 11/3/11 Blackboard Learning System Student Value CorrectAnswer Feedback Response . current . dividend .annualized 100% Q holding pefiod nm> D. capital gain E. original investment Score: 1/1 Comments: 26. Assume the beta for the stock market in general is 1.0 and the beta for World-Wide Television Productions is 2.4. If the stock market increases in value by 10 percent, what is the expected increase in value for the World-Wide Productions stock? Student Value CorrectAnswer Feedback Response A. 12 percent B. 20 percent E c. 24 100% :2 percent D. 48 pe rc ent E. 14 percent General Expected increase = 10 percent x 2.4 = 24 percent Feedback: Score: 1/1 Comments: 27. ABC Corporation has assets that total $12 million and liabilities that total $4 million. It also has 500,000 shares of stock outstanding. What is the ABC's book value per share? Student Value CorrectAnswer Feedback Response A. $32 B. $24 E c. $16 100% Q webctap.gardner—webb.edul.../cobaltMainFrame.dowebct 14/20 11/3/11 Blackboard Learning System D. $8 E. $0 General Book value per share = ($12 million - 4 million)/500,000 = $16 Feedback: Score: 1/1 Comments: 28. An investment theory based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company is called the theory. Student Value Correct Feedback Response Answer . fundamental 100% [5 . technical nm> . efficient ma rket D. primary E. market Score: 1/1 Comments: 29. An investment theory based on the assumption that stock price movements are purely random is called the theory. Student Value Correct Feedback Response Answer . fundamental . technical . efficient 100% [5 market nm> D. primary E. market Score: 1/1 Comments: 30. Fred Manufacturing Company pays an annual dividend of $0.65 per share, has earnings per share of $2.50, and sells for $35 a share. What is this firm's dividend payout ratio? Student Value CorrectAnswer Feedback Response webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 15/20 11/3/11 Blackboard Learning System A. 18 percent B. 25 percent C. 28 percent E D. 26 100% :3 percent E. 32 percent General Payout ratio: $.65/$2.50 = 26 percent Feedback: Score: 1/1 Comments: 31. A market for existing financial securities that are currently traded among investors is called the market. Student Value Correct Feedback Response Answer A. technical B. fundamental C. efficient E D. secondary 100% Q E. primary Score: 1/1 Comments: 32. In order for a corporation's stock to be bought and sold on the New York Stock Exchange, the corporation must meet certain requirements. Which one of the following incorrectly states one of those requirements? Student Value Correct Feedback Response Answer A. A corporation's annual earnings before income taxes must be at least $10 million per year for the last webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 16/20 11/3/11 Blackboard Learning System three consecutive he most recent three years. B. All of the requirements listed in the other answers are correct. E C. The market 100% Q value of its publicly held stock must exceed $25 million. D. A corporation must have a total of at least 400 U.S. shareholders and at least 1,100,000 total shares outstanding. E. A corporation must have at least $75 million in revenues for the most recent year. Score: 1/1 Comments: 33. A request that a stock be bought or sold at the current market price is called a order. Student Value Correct Feedback Response Answer market 100% {3 limit . stop pops? round E. disc retionary webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 17/20 11/3/11 Blackboard Learning System Score: 1/1 Comments: 34. A request that an order be executed at the next available opportunity after the market price of the stock reaches a specified price is called a order. Student Value Correct Feedback Response Answer A. market E] B. limit 0% C. stop Q D. round E. discretionary Score: 0/1 Comments: 35. Ashley Riley wants to buy the stock of XYZ Company at a specified price. What type of order should she place? Student Value Correct Feedback Response Answer A. market order E] B. limit order 100% Q C. stop order D. discretionary order E. common order Score: 1/1 Comments: 36. A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called: Student Value Correct Feedback Response Answer E] A. dollar cost 100% Q averaging. B. dividend reinvest ment webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 18/20 11/3/11 webctap.gardner—webb.edul. . ./cobaltMainFrame.dowebct 37. C. buy and hold D. E. Score: plan. technique. regulated transaction. secured transaction. Comments: Blackboard Learning System 1/1 Which one of the following statements is true? E. Student Response . When buying stock on margin, an investor borrows stock from the brokerage firm. UsuaHy,a bank anangesfor theloanin a nargm Uansacfion. . Investors buy on margin because doing so offers them the potential for greater profits. . The margin requirement is established by the New York Stock Exchange. The current margin Correct Answer Value 0% Feedback 19/20 11/3/11 Blackboard Learning System requirement is 25 percent. Score: 0/1 Comments: Done webctap.gardner—webb.edul. . .lcobaltMainFrame.dowebct 20/20 ...
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This note was uploaded on 12/15/2011 for the course BAD 301 taught by Professor Null during the Fall '11 term at GWU.

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Chapter 14 practice Test - 11/3/11 Blackboard Learning...

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