Deck 19: Personal Finances and Investments

Question 1

Which of the following statements regarding investment objectives is incorrect?

A) The goals must be realistic in terms of economic conditions.
B) The goals must be tailored to the individual.
C) The goals must be specific and measurable.
D) The goals must be oriented toward the future.
E) All of these answers are correct.

Answer 1

E

Question 2

A personal income statement lists your ____ and ____ for a specific period of time.

A) assets; budgeted amounts
B) liabilities; assets
C) assets; liabilities
D) expenses; net worth
E) income; expenses

Answer 2

E

Question 3

Which of the following statements is false?

A) The sooner you start an investment programme, the more time your investments have to work for you.
B) A personal income statement lists your assets and liabilities.
C) A budget is a specific plan for spending your income for a specific period of time.
D) It is important to balance your budget so that your income is equal to the money you spend or invest each month.
E) Unfortunately, many individuals spend more than they make.

Answer 3

B

Question 4

Pro-future, Inc.
Sandy is a personal financial planner at Pro-future, Inc.Pro-future is a financial company that focuses on personal and business financing.When potential customers come to Sandy for financial advice, she first determines their investment goals in order to create a financial plan that fits their needs.Once she has created a suitable financial plan for a customer, Sandy gives her clients a pamphlet with suggestions for helping to accumulate the amount of money that they need.
Advice about risk is given to all of Sandy's clients.Sandy also makes strategic financial plans for each of her customers, which helps them to track and achieve their financial goals.
Refer to Pro-future, Inc.If Sandy were to create a personal budget for her clients, what would be her first step?

A) Estimate their expected amount of money to be allocated to their investments
B) Determine the amount of income needed to cover their expenses
C) Calculate their long-term debt
D) Estimate their income for a specific period
E) Estimate their expenses for a specific period

Question 5

Pro-future, Inc.
Sandy is a personal financial planner at Pro-future, Inc.Pro-future is a financial company that focuses on personal and business financing.When potential customers come to Sandy for financial advice, she first determines their investment goals in order to create a financial plan that fits their needs.Once she has created a suitable financial plan for a customer, Sandy gives her clients a pamphlet with suggestions for helping to accumulate the amount of money that they need.
Advice about risk is given to all of Sandy's clients.Sandy also makes strategic financial plans for each of her customers, which helps them to track and achieve their financial goals.
Refer to Pro-future, Inc.Which of the following would Sandy explain in order to match her clients' possible investment plans with their investment goals?

A) Secondary market
B) Primary country debts
C) Personality and temper
D) Risk and safety
E) Investment ratings

Question 6

Pro-future, Inc.
Sandy is a personal financial planner at Pro-future, Inc.Pro-future is a financial company that focuses on personal and business financing.When potential customers come to Sandy for financial advice, she first determines their investment goals in order to create a financial plan that fits their needs.Once she has created a suitable financial plan for a customer, Sandy gives her clients a pamphlet with suggestions for helping to accumulate the amount of money that they need.
Advice about risk is given to all of Sandy's clients.Sandy also makes strategic financial plans for each of her customers, which helps them to track and achieve their financial goals.
Refer to Pro-future, Inc.Why would Sandy consider risk to be a good thing?

A) The higher the risk, the larger the possible return.
B) The higher the risk, the lower the possible investment.
C) The lower the risk, the larger the possible return.
D) The higher the risk, the higher the rate of investment.
E) The lower the risk, the lower the rate of investment.

Question 7

Pro-future, Inc.
Sandy is a personal financial planner at Pro-future, Inc.Pro-future is a financial company that focuses on personal and business financing.When potential customers come to Sandy for financial advice, she first determines their investment goals in order to create a financial plan that fits their needs.Once she has created a suitable financial plan for a customer, Sandy gives her clients a pamphlet with suggestions for helping to accumulate the amount of money that they need.
Advice about risk is given to all of Sandy's clients.Sandy also makes strategic financial plans for each of her customers, which helps them to track and achieve their financial goals.
Refer to Pro-future, Inc.Which of the following best describes a financial planner like Sandy?

A) A person who has had at least two years of training in investments, insurance, taxation, retirement planning, and estate planning and has passed a rigorous examination
B) A person who has passed a national but not state examination
C) A person who has had at least six months of training in investments, insurance, taxation, retirement planning, and estate planning
D) A person who has had at least five years of training in investments, insurance, taxation, retirement planning, and estate planning, and has graduated from high school
E) A person who has a college degree in planning

Question 8

Sira Barker has a monthly income of €2,800.Her monthly expenses total €2,200.Based on this information, she has

A) a cash deficit of €2,800.
B) a cash surplus of €2,200.
C) assets that total €600.
D) liabilities that total €2,200.
E) a cash surplus of €600.

Question 9

The purpose of a budget is to

A) determine the amount of your total liabilities.
B) develop a plan for spending your future income over a specific time period.
C) reduce total assets.
D) increase monthly expenses.
E) develop a plan for increasing credit purchases.

Question 10

Lillian decides to use the money she has saved to earn a financial return.This is called a(n)

A) investment goal.
B) investment plan.
C) financial plan.
D) bank account.
E) personal investment.

Question 11

Pro-future, Inc.
Sandy is a personal financial planner at Pro-future, Inc.Pro-future is a financial company that focuses on personal and business financing.When potential customers come to Sandy for financial advice, she first determines their investment goals in order to create a financial plan that fits their needs.Once she has created a suitable financial plan for a customer, Sandy gives her clients a pamphlet with suggestions for helping to accumulate the amount of money that they need.
Advice about risk is given to all of Sandy's clients.Sandy also makes strategic financial plans for each of her customers, which helps them to track and achieve their financial goals.
Refer to Pro-future, Inc.What is a possible suggestion Sandy might give her clients in order to meet their retirement goals?

A) Finance your credit cards first.
B) Do not participate in 401(k) or 403(b) programmes.
C) Take advantage of any employer-sponsored retirement plans.
D) Allocate enough money to meet all of your needs.
E) Invest 30 percent of your monthly earnings for retirement.

Question 12

Each year, Miguel Guerra constructs a personal balance sheet to determine his

A) cash surplus.
B) cash deficit.
C) net worth.
D) cash balance.
E) expenses.

Question 13

To determine his net worth, Joe Gillian subtracts ____ from ____.

A) liabilities; assets
B) assets; liabilities
C) expenses; income
D) income; expenses
E) assets; budgeted amounts

Question 14

Personal Accents, Inc.(PAI)
Personal Accents, Inc., (PAI) is a publicly-held company that specialises in selling a variety of skin- and hair-care products.The company owns specialty stores that appeal to both men and women.Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's.
Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment.Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything.Fearing the potential loss of money in high-risk investments, she has invested in PAI.She feels that the company is established and has maintained stable profits over the years.She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively.
Refer to Personal Accents, Inc.If Charlotte purchases PAI bonds, how often will she receive interest payments?

A) When the bonds mature
B) Every month
C) Every quarter
D) Every six months
E) Once a year

Question 15

Personal Accents, Inc.(PAI)
Personal Accents, Inc., (PAI) is a publicly-held company that specialises in selling a variety of skin- and hair-care products.The company owns specialty stores that appeal to both men and women.Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's.
Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment.Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything.Fearing the potential loss of money in high-risk investments, she has invested in PAI.She feels that the company is established and has maintained stable profits over the years.She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively.
Refer to Personal Accents, Inc.Which of these would be considered a high-risk investment for Charlotte as a PAI investor?

A) Buying PAI stocks
B) Buying PAI bonds
C) Selling PAI stock short
D) Buying mutual funds that hold PAI stock
E) Selling mutual funds that hold PAI stock

Question 16

On January 1, 2012, Brad came up with an investment goal of having €50,000 in assets by March 31, 2012.What fault would financial planners find with Brad's goal?

A) This goal is not specific enough.
B) This goal cannot be easily measured to determine if it has been achieved.
C) This goal is overly specific.
D) This goal is not future-oriented enough.
E) This goal is unreasonable because of uncertain economic conditions.

Question 17

Debby Martin has assets valued at €120,000 and liabilities that total €50,000.Based on this information, what is Debby's net worth?

A) €120,000
B) €50,000
C) €170,000
D) €70,000
E) €0

Question 18

Personal Accents, Inc.(PAI)
Personal Accents, Inc., (PAI) is a publicly-held company that specialises in selling a variety of skin- and hair-care products.The company owns specialty stores that appeal to both men and women.Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's.
Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment.Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything.Fearing the potential loss of money in high-risk investments, she has invested in PAI.She feels that the company is established and has maintained stable profits over the years.She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively.
Refer to Personal Accents, Inc.Charlotte recently chose an account executive for her investment and financial needs.Which of the following best describes an account executive?

A) A financial ad executive
B) An individual who gets free money for clients
C) A discount agent
D) An individual who sells manufactured products for clients
E) An individual who buys and sells securities for clients

Question 19

Personal Accents, Inc.(PAI)
Personal Accents, Inc., (PAI) is a publicly-held company that specialises in selling a variety of skin- and hair-care products.The company owns specialty stores that appeal to both men and women.Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's.
Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment.Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything.Fearing the potential loss of money in high-risk investments, she has invested in PAI.She feels that the company is established and has maintained stable profits over the years.She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively.
Refer to Personal Accents, Inc.If Charlotte wants to buy more PAI stock and puts in a request to purchase it at the current market price, this would be called a ____ order.

A) matched
B) market
C) limit
D) money
E) specific

Question 20

Personal Accents, Inc.(PAI)
Personal Accents, Inc., (PAI) is a publicly-held company that specialises in selling a variety of skin- and hair-care products.The company owns specialty stores that appeal to both men and women.Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's.
Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment.Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything.Fearing the potential loss of money in high-risk investments, she has invested in PAI.She feels that the company is established and has maintained stable profits over the years.She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively.
Refer to Personal Accents, Inc.Which of the following was required of PAI when it first issued publicly-traded stock for the company?

A) It had to offer the account executive's name to potential investors.
B) It had to provide the company budget to potential investors.
C) It had to offer dividends.
D) It had to provide a prospectus.
E) It had to offer a security index to the public.

Question 21

Which of the following statements is most in keeping with investment counselors' suggestions for investment goals?

A) By January 2015, I will have total assets of €180,000.
B) I want to invest to earn money with money.
C) In twenty years or so, I want to have €10,000 in a bank account.
D) I want to invest in stock that is growing.
E) By December 2014 or 2015, I want to hold stocks in a Fortune 500 company.

Question 22

Which of the following investments is most liquid?

A) Stocks
B) Real estate
C) Antique collectibles
D) Corporate bonds
E) Savings accounts

Question 23

To get the proper financial counseling, Marquis and Marta Jacobs made an appointment with Harry Hanstein.Harry has had two years of training in securities, insurance, taxation, retirement planning, and estate planning and has passed a rigorous qualifying examination given by the Certified Financial Planner Board of Standards in Denver.Harry is a

A) real estate broker.
B) stockbroker.
C) certified public accountant.
D) tax consultant.
E) certified financial planner.

Question 24

The ease with which an investment can be converted into cash is called

A) profitability.
B) convertibility.
C) cashibility.
D) redemption value.
E) liquidity.

Question 25

The stock market reached an all-time high at ___ in the fall of 2007.

A) 6,600
B) 10,900
C) 13,000
D) 14,000
E) 16,500

Question 26

The total return you receive on an investment over a specific period of time divided by the amount invested is referred to as the

A) rate of investment.
B) rate of return.
C) current yield.
D) yield to maturity.
E) income return.

Question 27

Christine wants to start purchasing stock from individual companies, but she wants to maintain a conservative investment strategy with only safe stocks.What type of stocks should Christine invest in?

A) High-tech stocks
B) Old stocks
C) Blue-chip stocks
D) Mutual funds
E) IPOs

Question 28

Since Mike and Carol are nearing retirement age, they are concerned with the need for their investments to provide income.If you were a financial planner, which of the following would you not recommend to Mike and Carol as an investment?

A) Blue-chip stocks known for paying dividends
B) Stocks of high-growth companies
C) Corporate bonds
D) Government bonds
E) Certificates of deposit

Question 29

Martie Brown is now retired and asks for your help choosing an investment that will provide a steady source of income.In this situation, you recommend

A) growth stocks.
B) certificates of deposit.
C) commodities.
D) margin investments.
E) high-risk corporate bonds.

Question 30

Most investment counsellors recommend that an individual establish an emergency fund equal to at least

A) one month's living expenses.
B) one month's gross salary.
C) two times the take-home salary.
D) three months' living expenses.
E) nine months' living expenses.

Question 31

All of the following would satisfy the safety factor of investing except

A) savings accounts.
B) blue-chip stocks.
C) a certificate of deposit.
D) highly rated municipal bonds.
E) antiques and collectibles.

Question 32

Barry Ferrell has monthly income of €2,500.His monthly expenses are €2,000.Based on this information, Barry should establish an emergency fund of at least

A) €2,000.
B) €2,500.
C) €7,500.
D) €6,000.
E) €1,500.

Question 33

What is the general relationship between risk and return?

A) These two factors are not related.
B) As risk increases, returns will decrease.
C) They are directly related to one another.
D) Risk is the chance for loss, whereas return is the chance for speculation.
E) As returns increase, the risk involved decreases.

Question 34

In order to reach goals of high returns on your investments, what must you generally give up?

A) Risk
B) Safety
C) Stocks
D) Money
E) Return

Question 35

At the beginning of the year, John Stewart invested €10,000.Twelve months later, John sold his investment for €11,000.Assuming he received no dividends or interest during this time, what is his rate of return?

A) €11,000
B) €10,000
C) 10 percent
D) 9 percent
E) It is impossible to calculate rate of return with this information.

Question 36

Haverting, Inc., is a fast-growing biotech company.What is Haverting likely to do with any profits it generates?

A) Pay them out to stockholders as dividends
B) Invest them in the stock of other companies
C) Reinvest them in Haverting to finance growth
D) Keep half and pay the rest to stockholders
E) Use the money to reduce corporate debt

Question 37

Which of the following statements is true about retirement plans?

A) Only employers are able to contribute to 401(k) plans.
B) You must pay taxes on Roth IRA contributions.
C) All employers match some or all of an employee's contributions to a 401(k) plan.
D) Contributions to traditional IRAs are not tax-deductible.
E) Some nonprofit and government agencies offer 401(k) plans.

Question 38

Instead of paying dividends to their stockholders, growing corporations typically

A) pay bonuses to their stockholders.
B) sell more stock to the public.
C) pay back their bank loans more quickly.
D) reinvest profits in the business.
E) provide steady income to their investors.

Question 39

Which of the following would most likely be considered the safest investment?

A) Corporate bond
B) Certificate of deposit
C) Ordinary share
D) Cumulative preferred stock
E) Preferred stock

Question 40

Jan Murphy would like some help choosing an investment that will grow over the next ten years.Which of the following investments would you recommend for growth?

A) Savings accounts
B) Corporate bonds
C) Municipal bonds
D) Ordinary share
E) Commodities

Question 41

According to Suze Orman, how much of Jackie Martin's portfolio should be invested in growth investments if she is 40 years old?

A) 33 percent
B) 40 percent
C) 50 percent
D) 70 percent
E) 90 percent

Question 42

Which of the following is not one of the types of bonds issued by the federal government?

A) Treasury notes
B) Savings bonds
C) Treasury municipals
D) Treasury bonds
E) Treasury bills

Question 43

A government security that is sold in minimum units of €100 and has maturities that may be as long as one year is a

A) Series EE savings bond.
B) Savings bond.
C) Treasury bond.
D) Treasury note.
E) Treasury bill.

Question 44

Robert has been saving his money and decides he wants to invest it.Which of the following is considered the most speculative?

A) A bank account
B) Corporate bonds
C) Real estate
D) Derivatives
E) Preferred stock

Question 45

Dillon owns a €1,000 corporate bond.He receives semiannual payments of €35 for his bond.What is the bond's stated interest rate?

A) 3.5 percent
B) 5 percent
C) 7 percent
D) 8 percent
E) 10 percent

Question 46

Which of the following is not a suggested tip for making investment decisions?

A) Do your homework about potential investments.
B) Keep copies of materials used to make investment decisions.
C) Monitor the value of your investments.
D) Keep accurate records.
E) Choose the least expensive online broker for stock purchases.

Question 47

Which of the following would most likely be classified as a traditional investment?

A) Ordinary share issued by new corporations
B) Mutual funds
C) Corporate bonds
D) Market order
E) Savings account

Question 48

What are the most conservative of all investments?

A) Mattresses
B) Bank accounts
C) Ordinary shares
D) Corporate bonds
E) Mutual funds

Question 49

Axon Corporation decides to issue convertible bonds.Why might Axon prefer to issue convertible bonds?

A) It will receive more money from selling convertible bonds.
B) It will not have to make interest payments on convertible bonds.
C) Convertible bonds generally carry a lower interest rate than regular bonds.
D) Issuing convertible bonds generally increases a corporation's sales.
E) Convertible bonds do not have to be paid back if they are not converted.

Question 50

A government security that is sold in €100 units with a maturity of more than one year but not more than ten years is a

A) Series EE savings bond.
B) Savings bond.
C) Treasury bond.
D) Treasury note.
E) Treasury bill.

Question 51

What would cause a corporate bond with a €1,000 face value and a fixed interest rate of 7 percent to increase in value?

A) The bond receives a lower rating by Moody's or Standard & Poor's.
B) Overall interest rates in the economy increase.
C) The government places an interest ceiling on corporate bonds.
D) Overall interest rates in the economy decrease.
E) The corporation files for protection under the bankruptcy laws.

Question 52

The purpose of asset allocation is to

A) reduce commission charges.
B) increase investment risk.
C) reduce government fees associated with investing.
D) reduce taxes paid to the IRS.
E) reduce investment risk.

Question 53

For a corporate bond with a face value of €1,000 and a stated interest rate of 6 percent, the owner would receive

A) €60 every six months.
B) €60 every month.
C) €30 every six months.
D) €30 every month.
E) €60 between the date of purchase and the maturity date.

Question 54

Anne Martinez owns a convertible bond that allows her to convert her €1,000 bond to 50 shares of the corporation's ordinary share.What is the lowest stock price that would allow her to convert her bond to shares of ordinary share?

A) €10
B) €15
C) €20
D) €25
E) €30

Question 55

Interest payments on corporate bonds are usually paid

A) every month.
B) every quarter.
C) every six months.
D) every year.
E) when the bond matures.

Question 56

Kaitlyn purchases a €1,000 corporate bond with a fixed interest rate of 5 percent for €900.What is the most likely explanation for this apparent bargain?

A) Overall interest rates in the economy increase.
B) Someone just wanted to get rid of the bond quickly.
C) The bond receives a better rating by Standard & Poor's or Moody's.
D) Overall interest rates in the economy decrease.
E) The company just introduced a new product.

Question 57

Corporate bonds are a form of

A) short-term debt financing.
B) bank account.
C) long-term equity financing.
D) long-term debt financing.
E) short-term equity financing.

Question 58

Since 1926, government bonds have returned an average of about ___ percent a year.

A) 14
B) 12
C) 9
D) 6
E) 3

Question 59

Paul purchases a government bond for €1,000, and it matures in thirty years.Paul purchased a

A) Treasury bond.
B) Savings bond.
C) Treasury bill.
D) Treasury note.
E) General obligation bond.

Question 60

Which of the following investments has the highest returns since 1926?

A) Certificates of deposit
B) Stocks
C) Corporate bonds
D) Government bonds
E) Commodities

Question 61

Many investors like mutual funds because they provide instant

A) diversification.
B) profitability.
C) financial returns.
D) access.
E) fee reductions.

Question 62

Jim Andrews purchased a government security that cost €50.At maturity, this security will be worth €100.Jim purchased a

A) General obligation bond.
B) Savings bond.
C) Revenue bond.
D) Corporate bond.
E) Treasury bill.

Question 63

Frank Bart bought 100 shares of Home Depot for €46 a share.Later, he sold his 100 shares for €56 a share.Frank's profit is referred to as

A) just plain luck.
B) a margin profit.
C) selling high.
D) a capital gain.
E) an SEC transaction.

Question 64

The board of directors of Dean Foods declares that owners of its stock will now have three times as many shares.This is called a

A) 30 percent stock dividend.
B) three-for-one stock split.
C) two-for-one stock split.
D) 300 percent stock dividend.
E) stock price revaluation.

Question 65

A bond issued by a state or local government is called a(n)

A) state treasury note.
B) state treasury bond.
C) exempt bond.
D) municipal bond.
E) zero-coupon bond.

Question 66

Kelso Corporation declared a 10 percent stock dividend.John, one of the stockholders, has 100 shares.How many shares will John own after the stock dividend?

A) 110
B) 10
C) 1
D) 1,100
E) 90

Question 67

Which of the following is not a characteristic of ordinary share?

A) Shares can be sold for a capital gain if the price of the stock increases.
B) The firm has no legal obligation to pay dividends to stockholders.
C) An increase or decrease in the market value of the stock will have a corresponding effect on the value of the investment.
D) Each share of stock represents debt for the corporation.
E) Cash dividends are generally paid on a quarterly basis.

Question 68

The type of investment that combines and invests the funds of many individual investors under the guidance of professional managers is called a(n)

A) NOW account.
B) securities exchange.
C) prospectus.
D) mutual fund.
E) option fund.

Question 69

Intel's board of directors declares a three-for-one stock split.Prior to the split, the market price of a share of Intel stock was €30.About how much will each share be worth after the split?

A) €30
B) €90
C) €10
D) €120
E) €15

Question 70

The type of stock in which stockholders are assured that omitted dividends will be paid to them before other individuals will be paid is ____ stock.

A) Ordinary
B) convertible preferred
C) Preferred
D) participating preferred
E) cumulative preferred

Question 71

The board of directors of Netflix declared a two- for-one stock split.If Sally Smith owned 400 shares before the split, how many shares does she own after the split?

A) 200
B) 400
C) 600
D) 800
E) 1,000

Question 72

Delores Hudgins wants to choose an investment that will provide tax-free income.Which of the following investments would you recommend?

A) Municipal options
B) Municipal bonds
C) Corporate bonds
D) Preferred stock
E) Ordinary share

Question 73

If Sara purchases 100 shares of Abercrombie and Fitch stock for €20 a share and then sells the stock for €23 per share, Sara will have a

A) €3 dividend per share.
B) capital gain of €300.
C) capital gain of €100.
D) €300 decrease in the value of her stock.
E) total return of €3.

Question 74

What are the three ways that individuals can make money by buying ordinary share?

A) Through an increase in the value of the stock, dividend payments, and stock splits.
B) Through stock splits, stock exchanges, and cash dividends.
C) Through dividends, increasing stock value, and conversion to bonds.
D) Through stock splits, stock buys, and dividends.
E) Through stock price appreciation, stock conversions, and stock dividends.

Question 75

Which of the following statements is true?

A) Ordinary shares is a more conservative investment than preferred stock.
B) Dividends on preferred stock are less secure than dividends paid to ordinary shareholders.
C) Preferred stockholders have a priority claim on dividends before ordinary shareholders.
D) As the basic form of ownership, ordinary shareholders receive their dividends before any other class of stock.
E) As the basic form of ownership, ordinary shareholders have a priority claim on a firm's assets if the firm enters bankruptcy.

Question 76

The division of each outstanding share of a corporation's stock into a greater number of shares is called

A) a stock split.
B) a stock conversion.
C) a stock dividend.
D) a cash dividend.
E) retained earnings.

Question 77

The type of stock that may be exchanged for ordinary share is ____ stock.

A) Equity
B) convertible preferred
C) Preferred
D) participating preferred
E) cumulative preferred

Question 78

The price of one share of stock at a particular time is known as

A) the par value.
B) a stock dividend.
C) the market value.
D) the current yield.
E) the current ratio.

Question 79

When a corporation pays a dividend in the form of additional stock, the dividend is called a

A) cash dividend.
B) stock split.
C) retained earning.
D) stock dividend.
E) stock conversion.

Question 80

Tiffany Nelson puts her money in a single investment that is made up of many different investments and is managed by a team of professionals.Tiffany invested in

A) the stock market.
B) a mutual fund.
C) a stock fund.
D) a brokerage.
E) loaded funds.