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| 1 | |
The difference between common stock and preferred stock is that: |
| | A) | Dividends are paid to holders of common stock before holders of preferred stock. |
| | B) | Dividends are paid to holders of preferred stock before holders of common stock. |
| | C) | Preferred stock holders have voting rights and common stock holders do not. |
| | D) | Preferred stock has a lower price than common stock. |
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| 2 | |
What is a stock split? |
| | A) | When the shares owned by existing stockholders are divided into a larger number of shares. |
| | B) | When the shares owned by existing stockholders are divided into a smaller number of shares. |
| | C) | When investors pool their money and "split" the price of the stock. |
| | D) | When a company issues new stock at a reduced price. |
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| 3 | |
The type of stock that usually sells for less than $1 per share is called: |
| | A) | Blue Chip stocks |
| | B) | Small cap stocks |
| | C) | Micro cap stocks |
| | D) | Penny stocks. |
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| 4 | |
The top section of a basic stock advisory report includes information on: |
| | A) | The company's sales outlook |
| | B) | Detailed information about the firm's products or services |
| | C) | Stock prices, earnings, and dividends |
| | D) | Net income and sales revenue |
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| 5 | |
The PE ratio (price-earnings ratio) for a company with a current stock price of $44.50 per share, after tax earnings of $12,500,000 and 4,600,000 shares outstanding is: |
| | A) | 16.36 |
| | B) | 6.11 |
| | C) | 120.92 |
| | D) | 36.8 |
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| 6 | |
The book value for a company with $75,000,000 in assets, $37,000,000 in liabilities, and 7,000,000 shares of stock issued is: |
| | A) | $3.45 |
| | B) | $5.43 |
| | C) | $5.29 |
| | D) | $49.33 |
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| 7 | |
Which of the following is true? |
| | A) | Over the counter stocks are traded on the NYSE. |
| | B) | Over the counter stocks are now sold at local banks. |
| | C) | Over the counter stocks are sold on the Nasdaq. |
| | D) | Over the counter stocks are sold on foreign exchanges. |
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| 8 | |
A request to buy or sell stock at a specific price is called a: |
| | A) | Stop order |
| | B) | Market order |
| | C) | Specified order |
| | D) | Limit order |
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| 9 | |
An advantage of dollar cost averaging when buying stock is: |
| | A) | You reduce the risk of losing your investment |
| | B) | You avoid the pitfall of buying high and selling low |
| | C) | You increase the profit of all shares owned |
| | D) | You can take advantage of a stock split. |
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| 10 | |
Buying stock on margin means that you: |
| | A) | Borrow money to buy the stock |
| | B) | Borrow stock to sell high and re-buy it when it drops in price |
| | C) | Buy stock at regular intervals to lower the average cost of the stock |
| | D) | Buy stock at a predetermined price during a specified time period. |
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