Personal Finance: Chapter 11 Test

Companies that have issued stock are required to pay dividends to stockholders.

• True

• False

Buying on margin is a conservative-low risk way to purchase stocks.

• True

• False

Calculate the net profit for the following trade AND determine whether it is a short-term or long-term gain: On February 10, 2021 bought 40 shares of General Motors, Inc at $10 per share and sold on November 1, 2021 for $20 per share.

• $400 as short-term gain

• $800 as long-term gain

• $400 as long-term gain

• $800 as short-term gain

People are mostly attracted to Preferred Stock:

• to have voting rights

• because they are popular and have the highest growth potential

• because they have more reliable dividends than common stock

A stop order trade requests that a stockbroker ____.

• buy a stock at the best possible price

• sell a stock for a specific amount

• decide when to sell a stock

• buy or sell a stock at its current value

A few years ago, Nina purchased stock in several companies to add to her portfolio. Nina noticed that she began receiving higher-than-average dividends compared to her previous portfolio. It can be concluded that her current portfolio has a number of____ stocks.

• income
• growth

• cyclical

• penny

An investor is charged a commission:

• only when stock is sold

• either when they buy or sell stock

• only when stock is purchased

• only when they make a capital gain on a "sale" of stock

A_____ is a market condition that occurs when investors are optimistic about the economy and they buy stocks in greater demand.

• bull market
• stock market

• over the counter market

• bear market

A marketplace where brokers meet to buy and sell stock is called .

• a securities exchange
• a primary market

• ebay

• a brokerage firm

Alyna and her two friends started Skate and Inflate Incorporated, a skateboard park and inflatables, where they solely own the shares in the corporation. Their corporate structure can be termed as:

• public corporation

• sole proprietorship

• private corporation

• none of the above