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Exam 14: Investing Fundamentals

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Question 31

Multiple Choice

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The security that represents equity or ownership of a corporation is

A) common stock.
B) corporate bonds.
C) long-term loans.
D) commercial paper.

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Question 32

Multiple Choice

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If you wish to have a direct voice in the running of a company, you should purchase

A) bonds.
B) notes.
C) common stock.
D) preferred stock.

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Question 33

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The return you will earn on certain stocks and bonds is uncertain because specific prices are not guaranteed.

If you have $5,000 to invest but will need to use the funds in three years to buy a home, you should

Which of the following is not true of common stock?

The time value of money concepts do not include

What would be the return on 200 shares of stock purchased on January 1, 2016 for $60 per share and sold on December 31, 2016 at $80 per share? Also assume that the company paid dividends of $2 per share over the year. The prices include all brokerage fees. Round to the nearest whole percent.

One of the factors impacting the risks of investments is the time period you have available to keep your money invested.

All of the following are true statements about common stock dividends, except

A stock's ________ is a measure of the degree of volatility in a stock's returns over time.

It is December 10th and you have a stock that you purchased last January 5th, which has increased in value by more than $3,000. You think the stock will not significantly increase or decrease in value over the next month or so, and you would like to take your gain. What should you do?

The risk-return relationship means

Use the following two columns of items to answer the matching questions below: -common stock A)first offering of a firm's stock to the public B)facilities that allow investors to purchase or sell existing stocks C)investors owning this type of stock have priority over common stockholders in receiving dividends D)market where existing securities are sold E)individual investors who buy and sell stocks within a day F)financial instruments that represent partial ownership of a firm G)debt instruments issued by the government or corporations to borrow money from investors H)professionals responsible for clients' funds

One advantage of investing in commercial real estate compared to stock, bonds, and mutual funds is that real estate

Common stockholders usually have more dividend rights than preferred stockholders.

Before you start an investment program, you should ensure liquidity by having money in financial institutions or in money market securities.

In addition to the interest earned on a bond, it is also possible that the actual bond will increase in value over time.

For minimal tax consequences, when your stock increases in value it should be held for

A company has a choice of whether to distribute dividends to common shareholders or to keep its profits in the company as retained earnings.

Growth stocks tend to