Deck 21: Stocks, Bonds and Mutual Funds

Question 1

The stock yield is the monthly dividend divided by the closing price per share.

Answer 1

False

Question 2

The yearly interest on a bond is the current selling price of the bond times the stated yearly interest rate.

Answer 2

False

Question 3

Bond quotes are stated in percents of face value.

Answer 3

True

Question 4

The current yield on a bond is the yearly interest of the bond divided by the cost of the bond at closing.

Question 5

The price-earnings ratio of stocks is not standard.

Question 6

Bonds do not repay the face value in the future.

Question 7

Stocks are quoted in decimals.

Question 8

The general public is allowed to trade stock on the floor of the stock exchange.

Question 9

If someone buys a bond for less than $1,000, that person will receive less annual interest.

Question 10

Stock represents shares of ownership in a company.

Question 11

Cumulative preferred stock is not entitled to dividends in arrears.

Question 12

A bond yield is the total annual interest of a bond divided by the total current cost of the bond.

Question 13

A commission is charged only when one is buying a stock.

Question 14

Stocks are traded over the Internet.

Question 15

A company that has no PE ratio has no earnings.

Question 16

A bond selling for more than the face value is selling at a premium.

Question 17

A bond quote of 74.375 is $743.50.

Question 18

The previous day's close of a stock is listed in today's transactions.

Question 19

Bond price-earnings ratios are similar to those of stocks.

Question 20

Each time the stock of a company trades on the exchange, the company receives additional money.

Question 21

Stockbrokers:

A)Do not act as middlemen
B)Cannot trade stock
C)Charge a commission for buying and selling
D)Are always right in all their stock recommendations
E)None of these

Question 22

The NAV helps an investor keep track of the value of his or her investment.

Question 23

A stock price will rise if:

A)Supply of stock is greater than demand
B)The price-earnings ratio is 10 or greater
C)Stock yield is greater than 8%
D)Demand for stock is greater than supply
E)None of these

Question 24

Preferred stock can:

A)Be cumulative
B)Have equal rights to common stock
C)Never receive dividends in arrears
D)Never have preference to dividends over common stockholders
E)None of these

Question 25

Bond quotes are stated in:

A)Dollars
B)Fractions of a dollar
C)Percents of face value
D)Percents of purchase price
E)None of these

Question 26

A bond that closed today at 94 down 2 closed yesterday in dollars at:

A)$960
B)$940
C)$950
D)$930
E)None of these

Question 27

The NAV is the dollar value of 10 shares of a mutual fund.

Question 28

Stock yield is found by the annual dividend divided by the:

A)Opening price per share
B)Closing price per share
C)Price-earnings ratio
D)Net change for the day
E)None of these

Question 29

Stocks are always quoted in:

A)Percents
B)Quarters of a dollar
C)Decimals
D)Quarter lots
E)None of these

Question 30

The yearly interest of a bond is the face value of the bond:

A)Divided by the stated yearly interest rate
B)Plus the stated yearly interest rate
C)Times the stated yearly interest rate
D)Minus the stated yearly interest rate
E)None of these

Question 31

Bonds are usually in denominations of:

A)$100
B)$1,000
C)$10,000
D)$100,000
E)None of these

Question 32

The price-earnings ratio is calculated by the closing price per share of stock divided by:

A)Quarterly earnings per share
B)Dividend per year
C)Annual earnings per share
D)Net change
E)None of these

Question 33

A mutual fund is an investment company that buys stocks and bonds and then sells shares in those securities to the public.

Question 34

A low-load fund is bought directly from the investment company.

Question 35

The offer price of a mutual fund is always the NAV and commission.

Question 36

Dividends in arrears mean:

A)No past dividends have been omitted
B)Preferred has been paid but not holders of common stock
C)Common stock must receive additional dividends not paid
D)A specific amount of dividends has not been paid
E)None of these

Question 37

A mutual fund is made up of

A)Many stocks
B)10 stocks
C)100 stocks
D)500 stocks
E)None of these

Question 38

ARUN stock closed at $8.11 + $.33. Yesterday's closing price was:

A)$8.44
B)$8.40
C)$7.78
D)$7.87
E)None of these

Question 39

Commissions charged on the trading of stock are:

A)Only on buying of stock
B)On buying and selling of stock
C)Only on sale of stock
D)Fixed
E)None of these

Question 40

A bond quote of 82.25 in dollars is equal to:

A)$82.25
B)$8.25
C)$8,025.50
D)$822.50
E)None of these

Question 41

Amy purchased 100 shares of Monsanto Company for $66.10 per share. Today the stock is selling for $80.45. Assuming a charge of $7.00 to buy and sell, how much did Amy earn if she sold her shares today?

A)$6,617
B)$8,038
C)$1,421
D)$14,655
E)None of these

Question 42

Loretta Scholten buys nine bonds of Leo Co. 7 ¼ 16 at 103.375. The commission is $3.00 per bond. The current yield to the nearest tenth of a percent is:

A)7.0%
B)7.1%
C)7.2%
D)7.3%
E)None of these

Question 43

Royal Co. receives a dividend of $4.88 per share. Today the closing price of the stock is $59.95. The current stock yield to the nearest tenth of a percent is:

A)8.1%
B)8.0%
C)8.2%
D)8.3%
E)None of these

Question 44

A bond closed at 102.25. The current yield is 10.4%. The annual interest is:

A)$102.90
B)$106.34
C)$105.80
D)$104.60
E)None of these

Question 45

Exxon sells its bonds at 108.375. The amount of premium or discount the bond is selling for is:

A)$17.35
B)$13.75
C)$13.25
D)$13.57
E)None of these

Question 46

Al Roy bought five bonds of Jort Co. 11 3/4 at 93.25 and four bonds of Inst. System 12x08 for 81.125. If the commission on the bonds is $2.50 per bond, the total cost of all the purchases is:

A)$4,662.50
B)$3,425.00
C)$7,930.00
D)$7,907.50
E)None of these

Question 47

The stock of WAL-MAT pays a dividend of $.88. The stock opened at $18.25 and closed at $18.33. The stock yield is:

A)4.8%
B)4.2%
C)4.1%
D)4.9%
E)None of these

Question 48

Jeff Ryan bought 200 shares of BUI for $19.50. Eight weeks later he sold the stock for $20.75. Assuming a 3% commission, his bottom line was a gain of:

A)$250.00
B)$374.50
C)$8.50
D)$257.50
E)None of these

Question 49

McDonald's Corp (MCD) stock is selling for $90.24 per share. They offer a dividend of $2.80 per share. What is the stock yield? (Round to nearest tenth.)

A)3.1%
B).031%
C)5.8%
D).059%
E)None of these

Question 50

Zolt Inc. (zolt) stock is selling for $8.22 per share with an EPS of .45 cents per share. What is Zolt's PE ratio? (Round to nearest tenth.)

A)18.3
B)19.5
C)8.3
D)20.0
E)None of these

Question 51

Ace Corporation pays its cumulative preferred stock $1.95 per share. There are 40,000 shares of preferred and 80,000 shares of common. In 2012, 2013, and 2014, because of slowdowns in the economy, Ace paid no dividends. Now, in 2015, the board of directors has decided to pay out $600,000 in dividends. The common stockholders receive:

A)$312,000
B)$288,000
C)$366,000
D)$444,000
E)None of these

Question 52

Ron bought one bond of Bee Company for 82.25. The original bond was 6 3/4 15. The current yield is (to the nearest tenth of a percent):

A)8%
B)8.2%
C)8.3%
D)9%
E)None of these

Question 53

Abby Ring buys five bonds of Moe Co. 12 3/4 15 at 89.375 with a commission of $5.00 per bond. Her total annual interest is:

A)$127.50
B)$637.05
C)$1,275
D)$637.50
E)None of these

Question 54

Jangles Co. earned $1.80 per share. Assuming a closing price of $40, the PE ratio is: (round to the nearest whole answer)

A)7
B)22
C)72
D)20
E)None of these

Question 55

TOX bond 7.55 yields 11%. The bond traded at a low of 71.25 and closed today at 71.625 + .75. The closing price yesterday was:

A)65.125
B)72.375
C)69.875
D)70.875
E)None of these

Question 56

The bond of Tuckpeck is 8¼ 14. The bond traded for a high of 93.25 and closed at 93. The current yield of the bond to the nearest tenth of a percent is:

A)8.8%
B)8.7%
C)8.9%
D)8.6%
E)None of these

Question 57

Bee Sting bought 400 shares of Google at $399.75 per share. Assume a commission of 2% of the purchase price. What is the total to Bee?

A)$159,900
B)$156,702
C)$163,980
D)$163,098
E)None of these

Question 58

Fidelity Investments is selling a real estate income mutual fund for $10.94 per share. The fund charges a load of 2.5%. What is the offer price?

A)$10.94
B)$10.67
C)$11.21
D)$11.48
E)None of these

Question 59

In April 2007, Sandi sold 1,600 shares of Federal Express at $105.00 per share. In May 2009, the stock reached a low during the Great Recession and was selling for $32.00 per share. Sandi used the proceeds from the 2007 sales and repurchased Federal Express at $32.00 per share in May 2009. What is the value of Sandi's stock holdings in Federal Express if the shares are selling for $91.00 today?

A)$168,000
B)$51,200
C)$477,750
D)$239,000
E)None of these

Question 60

The stock of VIC Corporation is trading at $39.63. The price-earnings ratio is 16 times earnings. The earnings per share for VIC Corporation are:

A)$2.84
B)$2.48
C)$4.96
D)$6.34
E)None of these

Question 61

Tim Sport bought four bonds of ABC 6 1/2 16 at 78.125. Can you help Tim calculate his (A) total annual interest, (B) total cost, and (C) current yield to the nearest tenth percent?