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Exam 12: Investing in Stocks

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Question 1

Multiple Choice

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Marissa purchases $500 of stock from a corporation without having to use an account executive or a brokerage firm.She is using a

A) Buy-and-hold technique.
B) Direct investment plan.
C) Direct reinvestment plan.
D) Dollar cost averaging technique.
E) Margin technique.

F) A) and E)
G) A) and D)

Correct Answer

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B

Question 2

Multiple Choice

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Alberta owns 100 shares of stock of ABC Company,and Bobby owns 200 shares of the same stock.If ABC Company pays a $5 dividend to all stockholders with a record date of Friday,June 15,then

A) Alberta will receive the same amount as Bobby if they owned the stock two business days before the record date.
B) Both will receive the dividend as long as they sell their stock three days before the record date.
C) Alberta will receive half as much as Bobby if they owned the stock two business days before the record date.
D) Both will receive the dividend if they bought the stock on the record date.
E) Alberta and Bobby will receive the same amount if they bought the shares at least one month before the record date.

F) B) and E)
G) D) and E)

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Question 3

True/False

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Gloria bought GE stock on March 4,2009,at a price of $5.87 and then quickly sold it on March 19,2009,at $11.20.Gloria is classified as a speculator.

What is the difference between a primary market and a secondary market?

The EPS of a company can be compared to the industry's average EPS.

Megan decided to start investing in stocks.Which of the following should she do first?

Stock advisory services provide detailed information about corporations.Describe three sections that appear in a report.

Many people purchase investments without doing any research.

Mary Jane owns 1,000 shares of TUV Trucking Company.TUV pays a quarterly dividend of $.50 per share.What is the total annual dividend that Mary Jane will receive?

An investor can rely completely on the findings of a stock advisory service in order to make decisions about buying or selling stocks.

Which of the following is some of the information found on a financial website such as www.finance.yahoo.com?

In reality,what is one of the most important things an investor should do before investing in any stocks?

The Yahoo! Finance website provides company-specific news,quotes,and charts.

Detailed research for stock investors can be found on the Yahoo! Finance website instead of at a stock advisory service such as Value Line.

Given the information shown here for TUV,Inc.,calculate the total return. • Dividends per share = $1.50 • Purchase price (July 15,2010) = $50.00 • Sell price (July 15,2011) = $56.00

You bought Harley-Davidson stock at $9 in March 2009 and saw the value increase to $22,then drop to $17 by early June 2009.Looking back,you realized that you missed a chance to "lock in" your profits and sell the stock at a price of $21 or higher.If you did not want to use a market order,what should you have used to lock in your profit?

Companies need to repay money from equity financing.

A put option is the right to buy 100 shares of stock at a guaranteed price before a specified expiration date.

Given the information shown here for NMOP Inc.,calculate the dividend yield. • Annual dividend = $4.00 • Current market value per share = $60.00

Which of the following usually offers some free information and charges for more detailed research information you may need to evaluate a stock investment?