Question 1

Marianne Walsh bought XYZ Corporation stocks for $26 a share at the beginning of 2019.At year-end, she received a dividend of $1.75 per share and then sold the stock for $30.50 a share.What was Marianne's annual shareholder return on the investment?

Accepted Answer

The answer of Marianne Walsh bought XYZ Corporation stocks for...

Question 2

When investors are optimistic about the overall economy and buy stocks, it is known as a(n) ____________ market.

Accepted Answer

A bull market refers to a market in which the prices of stocks are rising and investors are generally optimistic about the direction of the overall economy. This is typically accompanied by increased buying activity and can be a sign of a strong and healthy market.

Question 3

Oil-Slick Shipping stock was priced at $70 at the beginning of the year.Over the year the corporation paid a dividend of $3.25 and its stock price at year-end was $65.What is the trailing dividend yield?

Accepted Answer

The trailing dividend yield is calculated by dividing the annual dividend by the stock's price at the beginning of the period. In this case, it's $3.25 / $70 = 0.0464, or 4.64%, which rounds to approximately 5 percent.

Question 4

Which of these is not a sign for potential online investment scams?

Accepted Answer

Large-cap companies that pay a generous executive salary are not necessarily a sign of potential online investment scams. However, it is important to conduct thorough research and due diligence before investing in any company, regardless of its size or executive compensation. The other options listed are all signs of potential online investment scams.

Question 5

Assume that you purchased 200 shares of C-Mac Industries stock for $110 a share, that you received an annual dividend of $4.00 a share, and that you then sold your stock for $130 a share at the end of one year.What is the total profit on your investment? (Ignore commission amounts for this question.)

Accepted Answer

The total profit is calculated by adding the capital gains and the dividend income. Capital gains are calculated as (selling price - purchase price) * number of shares = ($130 - $110) * 200 = $20 * 200 = $4,000. Dividend income is calculated as dividend per share * number of shares = $4.00 * 200 = $800. Therefore, the total profit is $4,000 (capital gains) + $800 (dividend income) = $4,800.

Question 6

Which of the following is not a true statement?

Accepted Answer

The price-earnings ratio is based on the company's earnings per share, not its dividends.

Question 7

Jamie Presner purchased 100 shares of Bank of Montreal for $86.00 Jamie also paid $50 commission.What was the total purchase price for this transaction?

Accepted Answer

The total purchase price is calculated by multiplying the number of shares (100) by the price per share ($86.00) and then adding the commission ($50). This equals $8,600 + $50 = $8,650.00.

Question 8

A market in which an investor purchases financial securities (via an investment bank or other representative from the issuer of those securities is called the ____________ market.

Accepted Answer

The primary market is where new securities are issued and sold by the issuer, directly to the investor or through an investment bank acting as an underwriter. The secondary market is where already-issued securities are traded between investors. The technical and fundamental markets do not exist, and the efficient market refers to the concept that all available information is reflected in security prices.

Question 9

Last year, Hi-Lo Electronics earned $2.50 per share.If the current market value for a share of stock is $55, what is the firm's PE ratio?

Accepted Answer

PE ratio (price-to-earnings ratio) = Market value per share / Earnings per share
PE ratio = ($55 per share) / ($2.50 per share) = 22. Therefore, the answer is C.

Question 10

To calculate the annual dividend yield, the annual dividend is divided by the stock's

Accepted Answer

The answer of To calculate the annual dividend yield, the...

Question 11

Assume that you purchased 50 shares of Home Depot stock for $35 a share, that you received an annual dividend of $0.30 a share, and that you sold your Home Depot stock for $40 a share at the end of one year.What is the total return for your investment? (Ignore commission amounts for this question.)

Accepted Answer

The initial investment is 50 shares x $35/share = $1,750.

The dividend received is 50 shares x $0.30/share = $15.

The final sale price is 50 shares x $40/share = $2,000.

Therefore, the total return is ($15 + $2,000 - $1,750)/$1,750 = 0.1514 or 15.14%.

Therefore, the best choice is E.

Question 12

Assume the beta for the stock market in general is 1.0 and that the beta for World-Wide Television Productions is 2.4.Which of these statements is not true?

Accepted Answer

Since the beta for World-Wide Television Productions is higher than 1.0, it is more risky than the average stock, making statement E false.

Question 13

By using the Canada.Com Finance Web site, an investor can find information on all of the following except

Accepted Answer

It is illegal to provide or use insider information in making investment decisions, so it is not available through the Canada.Com Finance website. All the other options listed (B, C, D, and E) are available through the website as part of its resources for investors.

Question 14

The federal government requires that a corporation selling a new issue of securities must disclose information about the company and its finances in a(n)

Accepted Answer

A prospectus is a legal document that corporations must file with the Securities and Exchange Commission (SEC) before making a new issue of securities available for sale to the public. It contains detailed information about the company, its management, and its financials, as well as the risks involved with investing in the securities. This allows potential investors to make informed decisions about whether to invest in the company. The other options listed are not specific to new issues of securities and do not fulfill the regulatory requirements for disclosure.

Question 15

ABC Corporation has 1 million shares outstanding.The corporation's after-tax earnings for 2004 were $2.75 million.What is ABC's EPS for 2004?

Accepted Answer

The answer of ABC Corporation has 1 million shares outstanding.The...

Question 16

Becky Harie bought GBX Corporation stock for $24.38 a share.After six months, she received $2.25 in dividends and the market value the stock was $25.01 a share.If Becky decided to sell the stock today, what would be her shareholder return?

Accepted Answer

Becky's initial investment per share was $24.38. After six months, she received $2.25 in dividends, which brings her total return to $24.38 + $2.25 = $26.63.

The market value of the stock is now $25.01, which means Becky would have lost money if she sold the stock at the current market price.

To calculate Becky's shareholder return, we would use the following formula:

Shareholder Return = (End Price + Dividends - Initial Price) / Initial Price x 100%

Plugging in the numbers, we get:

Shareholder Return = ($25.01 + $2.25 - $24.38) / $24.38 x 100% = 23.63%

Therefore, Becky's shareholder return would be 23.63%, which is closest to answer D (23.63 percent).

Question 17

A market for existing financial securities that are currently traded between investors is called the ____________ market.

Accepted Answer

The secondary market is the market where existing financial securities, such as stocks and bonds, are traded between investors. The primary market is where new securities are initially sold, while the technical and fundamental markets refer to types of securities analysis. The efficient market refers to a market where prices reflect all available information, but it is not a specific type of market for existing securities.

Question 18

Which of the following is a high-risk, short-term stock investing technique? I.Purchasing on margin
II)Dollar cost averaging
III)Hedging with options

Accepted Answer

Purchasing on margin involves borrowing money from a broker to purchase stocks, which increases the potential for significant gains but also carries a high level of risk. Dollar cost averaging and hedging with options are both considered more conservative and lower-risk strategies.

Question 19

John Baker bought BCE stocks for $33 a share one year ago.He sold the stock a year later for $36.50 a share.What was John's capital gains yield?

Accepted Answer

The capital gains yield is calculated as (Selling Price - Purchase Price) / Purchase Price. So, ($36.50 - $33) / $33 = 0.106 or 10.6%.

Question 20

MasterCracked Manufacturing has after-tax profits that total $725,000.If the firm has 250,000 shares, what is the amount of earnings per share?

Accepted Answer

Earnings per share (EPS) is calculated by dividing the total after-tax profits by the number of shares. So, $725,000 / 250,000 shares = $2.90 per share.

Quiz 11: Investing in Stocks