Chaminade Univ MBA 754 (Investment Mgmt) Week 6 – Ch 06 Homework (Graded)
Grading SummaryThese are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Date Taken: Time Spent: Points Received: Question Type: # Of Questions: True/False 11 Multiple Choice 19 Grade Details - All QuestionsQuestion 1. Question : The decision of how much money to pay out in dividends is made by the Student Answer: board of directors. company shareholders. chief executive officer. chief financial officer. Question 2. Question : Aggressive stock management Student Answer: is the riskiest of all the investment strategies. involves active stock trading in the short-term in the quest for capital gains. concentrates on the long-term growth aspects of a security. concentrates on high dividend yielding stocks. Question 3. Question : Investors should never pay more than par value for a stock. Student Answer: True False Question 4. Question : Stocks generally have produced positive inflation-adjusted rates of return over the long-term. Student Answer: True False Question 5. Question : The par or stated value of common stock is important for Student Answer: accounting purposes only. helping the investor determine the stock's intrinsic value. helping the board of directors determine the dividend payout. helping the market determine the trading price of the stock. Question 6. Question : Shareholders who sell their stock on or after the ex-dividend date, but before the date of record, will still receive the declared dividend. Student Answer: True False Question 7. Question : When a company, working with an underwriter, offers the investing public a certain number of shares of its stock at a certain price, the company is making what is known as a Student Answer: public offering. rights offering. stock spin-off. treasury offering. Question 8. Question : Dividend yield is calculated by dividing Student Answer: the market price of one share of stock by the annual dividend per share. the annual dividend per share by the market price of one share of stock. earnings per share by market price per share. annual dividend per share by earnings per share. Question 9. Question : The common stock investment strategy that is the most basic strategy and is popular with conservative, quality-conscious individuals looking for competitive returns over the long run is the Student Answer: buy-and-hold strategy. current income strategy. growth strategy. speculation and short-term trading strategy. Question 10. Question : Which one of the following statements about common stock is correct? Student Answer: Each share of stock has a specified maturity date. Common stock gives stockholders first title to a share of the company's earnings, prior to other corporate obligations. Common stock typically provides higher levels of current income than do similar grade corporate bonds. Each share of common stock entitles the holder to an equal ownership position and an equal vote in the corporation. Question 11. Question : Treasury stock is a means of increasing the number of shares outstanding. Student Answer: True False Question 12. Question : There is a stronger tendency for the stock market to increase in value rather than decrease in value over time. Student Answer: True False Question 13. Question : Which one of the following investment strategies would NOT appeal to an investor who is most concerned with storage of value? Student Answer: buy-and-hold high income quality long-term growth speculation and short-term trading Question 14. Question : Rob owns 300 shares of Blackwood common stock valued at $9 a share. Blackwood has declared a 3-for-1 stock split effective tomorrow. After the split, Rob will own Student Answer: 100 shares valued at about $27 a share. 100 shares valued at about $3 a share. 900 shares valued at about $27 a share. 900 shares valued at about $3 a share. Question 15. Question : The investment value for a publicly traded stock can readily be found in the financial section of the newspaper or on the internet. Student Answer: True False Question 16. Question : The rate of return on a foreign investment is affected by changes in the exchange rates. Student Answer: True False Question 17. Question : As a general rule, which one of the following statements concerning the various values of common stock is correct? Student Answer: Market values are usually below book values. Par values are usually above book values. Market values are usually below par values. Book values are usually below market values. Question 18. Question : Tiffany owned 1000 shares of GIA stock which was selling for $1.50 per share when the company declared a 1 for 10 reverse split. After the split, Tiffany owned Student Answer: 10,000 shares worth approximately $1.50 per share. 10,000 shares worth approximately $0.15 per share. 100 shares worth approximately $15 per share. 100 shares worth approximately $1.50 per share. Question 19. Question : ADRs Student Answer: represent ownership in unlisted domestic stocks. pay dividends in U.S. dollars. receive company dividends only in U.S. dollars. are subject to taxation only by the U.S. government. Question 20. Question : Factors considered in making a decision on a firm's dividend include the Student Answer: II and IV only I, II and IV only I, II and III only I, II, III and IV Question 21. Question : An individual stock generally provides a Student Answer: dividend payment that ensures total protection from purchasing power risk. refuge from event risk. lower current income than that available from other types of investments. predictable annual rate of return. Question 22. Question : Engines, Inc. declares a 2-for-5 stock split. The stock currently sells for $3 a share. A shareholder who owned 100 shares of stock prior to the split will now own Student Answer: 40 shares valued at about $7.50 a share. 40 shares valued at about $1.20 a share. 250 shares valued at about $7.50 a share. 250 shares valued at about $1.20 a share. Question 23. Question : The value that represents the amount of stockholders' equity in a firm is called the Student Answer: par value. book value. liquidation value. market value. Question 24. Question : Over the last 10 years, what percentage of the total return on typical stocks in the Dow Jones average has come from dividends? Student Answer: 0% to 1.0% 2% to 4% 8% to 10% More than 10% Question 25. Question : Treasury stock can be used to do which of the following? Student Answer: I and III only II and IV only III and IV only I, III and IV only Question 26. Question : Shares of publicly traded stock can be issued either through a public offering or a rights offering. Student Answer: True False Question 27. Question : Over the 50-year period of 1953-2002, the stock market provided an average annual rate of return of approximately 11%. Student Answer: True False Question 28. Question : If a firm has a 2 million shares outstanding and its stock trades at $25, the company has a market capitalization of $50,000,000. Student Answer: True False Question 29. Question : Typical characteristics of growth stocks include Student Answer: rapidly growing dividends. high rates of growth in operations and earnings. acquisitions of competing companies. strong performance even in market downturns. Question 30. Question : Every shareholder is a part owner of the firm and, as such, has a direct claim on a portion of the firm's assets. Student Answer: True False