Finance Final Review 2

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44 Questions - Developed by: Dan - Developed on: - 6.900 taken

Final Review personal finance 2

  • 1
    "Own a corporation". They elect directors via proxies, who hire a CEO
  • 2
    Why do Corporations issue common stock?
  • 3
    How do you make money on stocks?
  • 4
    (Current Quarterly dividend x 4)/Current stock price=
  • 5
    How do you make money on stocks?
  • 6
    Stock splits:
  • 7
    Includes dividends plus capital gain (loss) on a stock during the holding period
  • 8
    The most meaningful type of annual return:
  • 9
    A hybrid security with characteristics of both a stock and a bond, where you receive cash dividends before common stockholders are paid any cash dividends.
  • 10
    Unpaid cash dividends accumulate and must be paid before any cash dividends are paid to the common stock holders
  • 11
    Can be traded for shares of common stock (Preferred stock)
  • 12
    Safe investment in strong and respected companies, attracts conservative investors
  • 13
    Pays higher than average dividend yield
  • 14
    Earns above average profits of all firms in the economy, less than 30% of profits are paid out as dividends, balance is reinvested in the firm. Investors realize appreciation in stock price
  • 15
    Stocks where the underlying value of the assets is worth more than current trading price, sum of the part is>whole
  • 16
    Companies Issuing shares in the primary market for the first time, typically a highly prized investment. However returns on these are not that good.
  • 17
    Follows the business cycle of advances and declines in the economy
  • 18
    Remains stable during declines in the economy
  • 19
    _____ The value of all securities, stocks and bonds issued by a corporation
    ____ The value of the common stock
  • 20
    Classification of common stocks are:
  • 21
    Very high risk and volatile, susceptible to fraudulent manipulation
  • 22
    EAFE is typical benchmark index of:
    Also these are best bought through a mutual fund
  • 23
    Corporation's after tax earnings divided by the number of outstanding shares of common stock
  • 24
    Price one share stock divided by the earnings per share of stock over the last 12 months
  • 25
    Used to measure stock risk. If it's lest than one it's riskier, greater than one less risky
  • 26
    Based on the assumption that a stock's intrinsic or real value is determined by the company's future earnings and cash flow
  • 27
    Based on the assumption that a stock's value is determined by the forces of supply and demand in the stock market as a whole
  • 28
    A stock's current market price reflects its true value, sometimes called the random walk theory
  • 29
    Investors are optimistic, more investors are buying stock and the stock market increases
  • 30
    Pessimistic Views on economy, more investors are selling stock and so the stock market declines.
  • 31
    The additional return investors receive by investing in higher risk stocks vs. risk free investments such as treasury bonds.
  • 32
    A market in which an investor purchases financial securities via an investment bank, or other representative, from the issuer of those securities.
  • 33
    A market for existing financial securities that are currently traded among investors
  • 34
    T/F: The Securities and exchange commission registers securities, licenses brokers, and prosecutes for stock fraud and insider trading.
  • 35
    Excessive buying and selling of securities to generate commissions
  • 36
    T/F: Most folks can successfully day trade due to commission costs
  • 37
    A Request to buy or sell stock at the current market value
  • 38
    A request to buy or sell a stock at a specified price or price range
  • 39
    A request to sell a stock at the next available opportunity after its market price reaches a specified amount
  • 40
    Let's the account executive decided when to execute the transaction and at what price
  • 41
    You must pay the dividend, sell high buy low
  • 42
    Buy and hold, dollar cost average, direct investment and dividend investment
  • 43
    These are not recommended: Buying stock on margin, selling short, trading in options
  • 44
    What type of fund should you buy first?

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