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WorksheetsChapter 5 - Financial investment
Total questions: 16
Worksheet time: 13mins
Because common shareholders are entitled to the profits that remain after all of a corporation's other obligations have been met, common shareholders are known as
residual owners.
temporary owners.
debt owners.
owners of last resort
If stocks earn an average rate of return of 12 %, their value doubles every
4 years
6 years
8 years
12 years
Which one of the following statements about common stock is true?
Common stock can provide attractive capital appreciation opportunities.
Dividends generally provide the greatest rate of return on common stocks.
Common stocks generally have a negative rate of return over a ten-year period.
The DJIA is the best indicator of the overall performance of common stocks.
Answer: A
For the period 2000 through 2009, the average annual price change for stocks in the S&P 500 index was
16%.
8%.
-1%.
) -50%.
Shareholders must either exercise their rights granted via a rights offering or let them expire unused.
True
False
) Stock held in treasury is a means of increasing the number of shares outstanding.
True
False
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
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.
A stock can have only one market value, but different investment values for different investors.
True
False
Westlake Industries has total assets of $42.5 million, total debt of $29.3 million, and $2.4 million of 6% preferred stock outstanding. If the company has 250,000 shares of common stock outstanding, its book value per share would be
$32.33.
$33.60.
$43.20.
$52.80.
You are given the following information on a company: BV $1.6b, MV: $12.804B, share outstanding 600,000. Which one of the following statements is correct based on the information provided?
The market price is $21.34 per share.
The investment value is $2.67 per share
The par value is $2.67 per share.
The book value is $21.34 per share.
Shareholders who sell their stock on or after the ex-dividend date, but before the date of record, will still receive the declared dividend.
True
False
Pilgrim Corp. stock currently sells for $25 per share? The annual dividend payment is $1.00 per share and earnings per share are $3.00. The dividend yield is ________ and the dividend payout ratio is ________.
12%; .4%
8.33%; 25%
4%; 33%
33%; 4%.
To take advantage of the opportunity to acquire additional shares of a company's stock without incurring any brokerage commissions, many investors participate in
IPO
dividend reinvestment plans.
deferred equity securities.
corporate trusts.
Which of the following are typical characteristics of small cap stocks?
I. strong balance sheets
II. market cap less than $2 billion
III. potential for high returns along with high risk
IV. potentially dramatic changes in their earnings
III and IV only
II and III only
I, III and IV only
II, III and IV only
Which of the following are characteristics of blue-chip stocks?
I. solid balance sheets
II. generous dividend yields
III. immunity from bear markets
IV. some growth potential
III and IV only
II and III only
I, II and IV only
II, III and IV only
Aggressive stock management
requires holding speculative stocks for the long term.
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.
