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Exam 11: Investing in Stocks

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Question 51

Multiple Choice

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Dividends remain with the stock until

A) five days after the date of record.
B) two business days after the date of record.
C) five days before the date of record.
D) two business days before the date of record.
E) five days before the actual payment date.

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Question 52

Multiple Choice

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Which of the following statements is not true?

A) Corporations are required by law to have two stockholder meetings each year.
B) Stockholders must approve any amendment of the corporate charter.
C) Stockholders must approve the sale of certain corporate assets.
D) Corporations are required by law to distribute annual reports.
E) Stockholders may vote in person or by proxy.

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Question 53

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If an investor owns participating preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

Assume that you purchased 200 shares of C-Mac Industries stock for $110 a share, that you received an annual dividend of $4.00 a share, and that you then sold your stock for $130 a share at the end of one year. What is the total profit on your investment? (Ignore commission amounts for this question.)

A securities exchange is a marketplace where member brokers who are representing investors meet to buy and sell securities.

Today, it is possible for investors to access a corporation's home page in order to evaluate an investment in its stock.

The most important priority that an investor in common stock enjoys is receiving cash dividends before preferred stockholders are paid any cash dividends.

When investors are optimistic about the overall economy and buy stocks, it is known as a(n) ____________ market.

Which of the following statements is not true?

The annual dividend yield is calculated by dividing the annual dividend by the initial stock investment.

Dividend payments on common stock are guaranteed, but the amount is determined by the board of directors.

A stock that pays higher than average dividends is called a(n) ____________ stock.

Doug Baker bought Toronto Dominion stocks for $50 a share one year ago. He sold the stock a year later for $55.50 a share. What was John's capital gains yield?

A penny stock typically sells for less than $.10 a share

Convertible preferred stock may be exchanged, at the shareholder's option, for a specified number of shares of common stock.

An investment bank is a financial institution where large corporations can deposit excess cash for short periods of time.

A blue-chip stock is too speculative for most investors.

A private corporation is a corporation whose stocks are traded openly in stock markets and maybe purchased by individuals.

A stock that follows the business cycle of advances and declines in the economy is called a(n) ____________ stock.

A speculative technique whereby an investor borrows part of the money needed to buy a particular stock.