Personal Finance ch 13 & 14

Jack Masters earns $40,000 a year. His monthly expenses total $2,100. What is the minimum amount of money that Mr. Masters should set aside in an emergency fund? a.) $8,400 b.) $2,100 C.) $10,000 d.) $6,300 e.) $4,200 d.) $6,300
If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond with a fixed interest rate? a.) The bond is worthless. b.) The value of the bond will increase. c.) It is impossible to determine if the bond’s value will increase or decrease. d.) The value of the bond will decrease. e.) The value of the bond will not change. b.) The value of the bond will increase.
One dollar placed in a safe deposit box in 1980 is worth: a.) about 10 cents. b.) less than 60 cents. c.) zero. d.) more than one dollar. e.) between 60 cents and one dollar. b.) less than 60 cents.
Which of the following investments would rank the highest with regard to safety? a.) preferred stock b.) common stock c.) corporate bonds d.) real estate e.) government bonds e.) government bonds
Which of the following investments offers the least amount of growth potential? a.) mutual funds b.) options c.) corporate bonds d.) real estate e.) common stock b.) options
Matt Jackson is single and 24. He has just graduated from college and obtained a job making $26,400 a year. He would like to establish a long-term investment program. Which of the following investments would you recommend for his investment program? a.) a money-market fund b.) corporate bonds c.) commodities d.) government bonds e.) growth stocks e.) growth stocks
An example of ____________ risk occurs when an investment does not keep up with prices that are increasing in the overall economy. a.) business failure b.) market c.) interest d.) current e.) inflation e.) inflation
Garrett Jennings is thinking about buying an investment. The investment option that he is thinking about buying represents the most basic form of ownership and pays a dividend. The dividend on this investment is paid after all other payments and dividends have been made. What investment is Garrett thinking about purchasing? a.) Real Estate b.) Mutual fund c.) Preferred Stock d.) Corporate Bond e.) Common Stock e.) Common Stock
An emergency fund should be deposited in a: a.) six month certificate of deposit. b.) savings account at the highest available interest rate. c.) safe place at home. d.) safe deposit box in a bank vault. e.) checking account. b.) savings account at the highest available interest rate.
Which of the following investments would provide the most predictable source of income? a.) government bonds b.) commodities c.) real estate d.) derivatives e.) common stock a.) government bonds
A type of investment that combines and invests the funds of many investors and manages it with a professional manager is called a(n): a.) certificate of deposit. b.) securities exchange. c.) NOW account. d.) mutual fund. e.) option fund. d.) mutual fund.
Twenty years ago, you began investing $2,000 a year. Because your investments earned an average of 8 percent a year, your investment portfolio has a current dollar value of $92,000. How much did you earn on your investments over the 20-year period of time? a.) $40,000 b.) $132,000 c.) $92,000 d.) $52,000 e.) $2,000 d.) $52,000
Earnings that are reinvested in a corporation are called: a.) additional capital. b.) collected capital. c.) retained earnings. d.) surplus earnings. e.) retention capital. c.) retained earnings.
When a bondholder loses money because interest rates in the economy increase, it is an example of ____________ risk. a.) interest rate b.) business failure c.) market d.) inflation e.) current a.) interest rate
A good rule of thumb is to limit installment payments to ____________ percent of your net monthly income. a.) 60 b.) 30 c.) 20 d.) 40 e.) 50 c.) 20
Dividends remain with the stock until: a.) five days before the date of record. b.) five days before the actual payment date. c.) two business days before the date of record. d.) two business days after the date of record. e.) five days after the date of record. c.) two business days before the date of record
Becky Martinez owns stock in GBX Corporation. The GBX stock has a market value of $50 a share. If Becky receives $4.50 a year in dividends, what is the current yield? a.) 11.1 percent b.) 7 percent c.) 8 percentd.) 9 percent e.) It is impossible to calculate the current yield with the above information. d.) 9 percent
Jo Bower owns 150 shares of Data General stock. She purchased the stock for $24 a share. She sold her stock for $30 a share. The commissions required to buy and sell her stock totaled $120. Assuming that she received no dividends during the time she owned the stock, what is her total return for this transaction? a.) $3,000 b.) $600 c.) $2,400 d.) $780 e.) $900 d.) $780
A request that a stock be bought or sold at a specified price is called a ____________ order. a.) limit b.) discretionary c.) market d.) round e.) stop a.) limit
Patsy Banz owns 220 shares of General Mills Corporation. For the last calendar quarter, General Mills Corporation paid a dividend of $0.47 a share. What is the total amount she received in her dividend check for this quarter? a.) $47 b.) $0.47 c.) $94 d.) $103.40 e.) It is impossible to calculate the total dividend amount with this information. d.) $103.40
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): a.) annual report. b.) quarterly report. c.) stock guide. d.) accountant’s audit report. e.) prospectus. e.) prospectus.
If the board of directors approves a two for one stock split, an investor who owns 150 shares before the split owns ____________ shares after the split. a.) 75 b.) 450 c.) 300 d.) 225 e.) 150 c.) 300
Mellon Manufacturing has after-tax income of $3 million. It also has 2 million shares of stock outstanding. What is the firm’s earnings per share? a.) $3 a share b.) $0.67 a share c.) $1.50 a share d.) None of the above answers is correct. e.) $2 a share c.) $1.50 a share
Last year, High-Tech Electronics earned $1.50 per share. If the current market value for a share of stock is $45, what is the firm’s PE ratio? a.) It is impossible to calculate a PE ratio with this information. b.) 3.3 c.) 0.033 d.) 30 e.) 33 d.) 30
The type of preferred stock that may be exchanged at the stockholder’s option for common stock is: a.) callable preferred stock. b.) corporate bond. c.) cumulative preferred stock. d.) participating preferred stock. e.) convertible preferred stock. e.) convertible preferred stock.
A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock. a.) growth b.) cyclical c.) blue-chip d.) income e.) defensive a.) growth
A stock that pays higher than average dividends is called a(n) ____________ stock. a.) blue-chip b.) defensive c.) growth d.) cyclical e.) income e.) income
A very safe investment that generally attracts conservative investors is called a(n) ____________ stock. a,) cyclical b.) penny c.) small-cap d.)growth e.) blue-chip e.) blue-chip
Apple Computer Corporation holds its annual meeting in April. Maxine Star, who owns stock in the company, cannot attend the meeting. She can vote by: a.) participatory certificate. b.) preemptive right. c.) cumulative certificate. d.) proxy. e.) voluntary certificate. d.) proxy.
A small-cap stock is defined as a corporation that has total capitalization of: a.) no capitalization. b.) between $250 million and $2 billion c.) less than $400 million. d.) less than $300 million. e.) more than $10 billion. b.) between $250 million and $2 billion

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