Stocks

To raise money, a company is selling shares of "dividend growth" stock. What does the company MOST LIKELY do with its earnings? A. B. C. D.

• Pays it all out to stockholders, four times a year.

• Reinvests it quarterly in order to expand the company.

• Pays out some to stockholders and reinvests the rest in its business.

• Invests it in company stock, which it then sells at a discount to stockholders.

How can you be MOST certain that a stock you own will allow you to vote at stockholder meetings and also earn dividends?

• It must be both a common stock and an income stock.

• It must be both a common stock and a growth stock.

• It must be both a preferred stock and an income stock.

• It must be both a preferred stock and a growth stock.

Why might ranchers want to lock in a price today for their cattle by signing a six-month futures contract? A. B. C. D.

• To be able to pay off the put option when the futures contract expires.

• To be able to buy a new herd of cattle when the six months is up.

• To be able to sell all of their cattle for a profit a year from now.

• To be able to plan on a certain amount of income in the future.

Which of the following is the WISEST strategy for a new investor in the stock market?

• Buy growth stocks recommended by a relative.

• Buy preferred stocks with a three-month call option.

• Buy blue chip income stocks through a brokerage firm.

• Buy the hottest common stocks and sell them as soon as the price rises.

You bought a stock on January 1. At the end of the year, why might you analyze published data from the S&P 500? A. B. C. D.

• To see whether the stock has just split.

• To find out how the stock performed that year.

• To decide whether to switch to the Dow next year.

• To determine whether bonds are earning more than stocks.