QUESTION Chad believes that the stock for the Marvelous Marble Company is underpriced. He expects that children are going to love playing with marbles soon and decides to buy a large amount of Marvelous stock. What helped Chad determine that the stock is underpriced? A) The stock’s book value is close to the market value. […]
QUESTION For years, the images of brokers shouting and scrambling on the floor of the New York Stock Exchange have offered an exciting perspective on the intensity of trading stocks under volatile conditions. Which of the following threatens to end the practice of floor trading on the NYSE? A) expansion of the over-the-counter market B) […]
QUESTION Terrence lives in a state that has suffered years of economic decline. He wants to support the state’s effort to rebuild by purchasing a variety of municipal bonds for his portfolio. He also wants diversity in bond payout options. What type of bond does NOT fit Terrence’s investment strategy? A) convertible bonds B) callable […]
QUESTION Dewayne has learned about a new security being issued and is considering investing in it. Before making a decision, he is reviewing a document from his broker that describes the security. What is Dewayne reviewing? A) stock certificate B) Treasury bill C) certificate of deposit D) prospectus E) bond coupon ANSWER Answer: D […]
QUESTION What type of bond gives the bondholder options to obtain the highest return? A) callable bonds B) prerefunded bonds C) convertible bonds D) serial bonds E) sinking-fund bonds ANSWER Answer: C Explanation: C) Convertible bonds can be converted by the bondholder into common stock of the corporation that issued the bonds. Bondholders can […]
QUESTION Which of the following regulates the buying and selling of stocks? A) U.S. Treasury B) Securities and Exchange Commission C) U.S. Department of Commerce D) Moody’s E) Standard & Poor’s ANSWER Answer: B Explanation: B) The SEC is a federal agency that regulates the various U.S. stock exchanges.
QUESTION Natsuko’s portfolio contains a number of convertible bonds. She is considering her options for maximizing returns from this investment. Where will Natsuko have the best chance of finding information that will guide her decision? A) the issuer’s callable date for the bonds B) the Dow C) the S&P 500 D) the Wilshire 5000 index […]
QUESTION Which investment strategy is least appropriate for an uninformed investor who wants to use a discount online broker? A) investing for income B) buying and holding C) investing for growth D) market timing E) value investing ANSWER Answer: D Explanation: D) Market timing may be the most difficult of all investment strategies. It […]
QUESTION The Helga’s Health board of directors feels the stock price for its Norwegian herbal supplements company has become too high and is pricing out potential investors. What action should the board take? A) lower the par value of its stock B) increase dividends to lower the market value C) issue a 2-for-1 stock split […]
QUESTION Which of the following has the LEAST influence on investors looking to buy stocks? A) book value B) dividends C) interest rate D) par value E) market value ANSWER Answer: D Explanation: D) Par value is the face value of a share of stock and is an arbitrary figure set by the issuing […]
