Chapter 14 – Investing in Stocks
99. (p. 477) The Arnold Fertilizer Company’s stock is selling for $55 in the market and its
earnings per share is $5. The company is projected to grow at a rate of 22% over the next
year. What is this company’s price/earnings to growth (PEG) ratio?
100. (p. 475) Fred Manufacturing Company pays an annual dividend of $0.65 per share, has
earnings per share of $2.50, and sells for $35 a share. What is this firm’s dividend payout
ratio?
Chapter 14 – Investing in Stocks
101. (p. 480) A market in which an investor purchases financial securities (via an investment
bank or other representative) from the issuer of those securities is called the ____________
market.
102. (p. 480) A market for existing financial securities that are currently traded among investors
is called the ____________ market.
103. (p. 480) Which one of the following is a true statement?
Chapter 14 – Investing in Stocks
104. (p. 481) In order for a corporation’s stock to be bought and sold on the New York Stock
Exchange, the corporation must meet certain requirements. Which one of the following
incorrectly states one of those requirements?
105. (p. 481) Which one of the following is a true statement?
Chapter 14 – Investing in Stocks
106. (p. 483) A request that a stock be bought or sold at the current market price is called a
____________ order.
107. (p. 484) A request that a stock be bought or sold at a specified price is called a
____________ order.
108. (p. 484) A request that an order be executed at the next available opportunity after the
market price of the stock reaches a specified price is called a ____________ order.
Chapter 14 – Investing in Stocks
109. (p. 483) Jennifer Fritz is thinking about purchasing the stock of the Sunshine Corporation at
the current market price. What type of order should she place?
110. (p. 484) Ashley Riley wants to buy the stock of XYZ Company at a specified price. What
type of order should she place?
111. (p. 484) Carol Fisher wants to sell the stock of Hathaway International at the next available
price after the market price reaches $50 per share. What type of order should she place?
Chapter 14 – Investing in Stocks
112. (p. 485) A long-term technique used by investors who purchase an equal dollar amount of
the same stock at equal intervals in time is called:
113. (p. 486) A long-term investment technique used by investors to purchase stock without
paying a commission to a broker is called
114. (p. 487) Which one of the following statements is true?
Chapter 14 – Investing in Stocks
115. (p. 488) Which one of the following statements is true?
116. (p. 489) To safeguard investments, stock owners who believe the price of their stock will go
down during an option period will purchase a:
Chapter 14 – Investing in Stocks
117. (p. 463) On May 24, 2010, Kurt Rogers bought 100 shares of stock from XYZ Corporation.
The quarterly dividend is $1.25 per share and the record date is May 25. How much will Kurt
receive for this quarterly dividend?
118. (p. 463) On May 20, 2010, Tony Blackman bought 100 shares of stock from XYZ
Corporation. The quarterly dividend is $1.25 per share and the record date is May 25. How
much will Tony receive for this quarterly dividend?
Chapter 14 – Investing in Stocks
119. (p. 465) If a stock has a 2-for-1 split:
120. (p. 465) Before a 2-for-1 stock split, Lisa’s stock was valued at $50 per share. What is her
per share value after the split?
121. (p. 465) After a 2-for-1 stock split:
Chapter 14 – Investing in Stocks
122. (p. 477) The beta of the S&P 500 is:
123. (p. 477) If Widget Corp. has a PEG value of .5, the stock is most likely:
124. (p. 479) Ms. Hart’s stock club uses numerous charts that plot past price movements and
other stock ratios. Her club relies on _______ analysis to determine stock selections.
Chapter 14 – Investing in Stocks
125. (p. 480) When a corporation sells stock to the general public for the first time, it is referred
to as a/an:
126. (p. 480) Initial public offerings (IPO’s) are a ___________ investment.
127. (p. 461) Stock dividends are determined by the:
Chapter 14 – Investing in Stocks
128. (p. 481) The stock exchange known to trade stock for innovative, growth companies is the:
129. (p. 461-462) Why do corporations issue stock? Why do investors buy that stock?
Chapter 14 – Investing in Stocks
130. (p. 461-467) What is the primary difference between common stock and preferred stock?
131. (p. 482) Describe the difference between full-service, discount, and on-line brokerage
firms.
Chapter 14 – Investing in Stocks
132. (p. 484-489) Matthew Boyd has saved $10,000 and wants to invest in common stock.
Identify three investment methods he could use and briefly explain how each of those
methods works.
133. (p. 485) Explain what dollar cost averaging is and why an investor would use the
technique.