Chapter 1 The Stock Market
1. In a reverse stock split, the number of outstanding shares is reduced while the market price per share stays
the same.
2. Comanche Ltd closed at $15.89, a $0.43 decrease from the closing price the day before. This is a 2.6%
decrease.
3. A crossover occurs when one moving average crosses over another. Investors should consider buying if a
fast-moving average crosses over a slow-moving average and should consider selling if a fast-moving average
crosses below a slow-moving average.
4. When there is a fractional part of a share, the company will buy the fractional share at current prices, because
fractional shares are not traded.
5. Vito owned 120 shares of a stock before the corporation instituted a 5-for-3 split. Before the split, the stock
was selling at $16 a share. Vito now has 200 shares of the stock that is worth about $26.67 each.
6. Xavier bought 4,000 shares of XYZ stock at $17.37 per share. This price was down $1.12 from the previous
day’s closing price. The ticker for this transaction will appear as XYZ 4K@ 17.37 p 1.12.
7. One share of Kimco’s common stock pays an annual dividend of $1.43. Today, Kimco closed at $19.09 with
a net change of +0.72. The stock yield at yesterday’s closing price is about 8%.
8. Rebecca correctly calculated the 3-day SMA of these stock prices $11, $14, $13, $11, and $12 as $12.67,
$12.67, and $12.00.
9. Leon purchased 8,500 shares of stock at a price of $11.45 a share. He sold the stock six years later at a price
of $19.78 per share. His capital gain is about 58%.
10. Roxanne placed a limit order. This means she specified the price that she would pay for a stock. If the stock
does not fall to that price, then the stocks are not purchased.
11. The stock bar chart below shows price and volume information for Medco Health Solutions (MHS) on
January 12. What was the opening price?
12. A candlestick chart is a type of stockbar chart. The real body is displayed in different colors to indicate the
action for that day. What does it mean if the real body is red?
13. On July 3, the ABC corporation closed at $43.67. This was a $0.47 increase from the close the day before.
What percent change is this?
14. Eleanor purchased $2,568 worth of stock and paid her broker a 0.5% fee. She sold the stock when the stock
price increased to $3,298, using an online broker that charged $7 per trade. What are her net proceeds?
15. Marcy owns common stock in Rex’s Pet Planet. The annual dividend is $2.05. The current price is $5.37.
What is the yield of the stock?
16. Sunni bought a $500 corporate bond. The bond pays 4.8% interest per year. If Sunni holds the bond for 15
years, how much will Sunni receive in interest?
17. A stock that was selling for $48 a share split 2-for-1. Before the split, the company had 3.4 million shares of
stock outstanding. What is the post-split number of shares outstanding?
18. Which is NOT personally liable for any losses or damages?
19. Steve and Elizabeth decide to become partners in a children’s cooking school. They need $80,000 for the
franchise. They invest in a 3:4 ratio, respectively. About what percent of the business is owned by Elizabeth?
20. What is the 4-day SMA for the following closing prices: $56, $61, $50, $57, $60, $58, and $57.
21. Renee made a spreadsheet to calculate the 5-day SMA for the stocks in her portfolio.
What formula should Renee put into C7?
22. What does the ticker P&G 3M@ 77.85 p 0.13 mean?
23. McKenzie buys 250 shares of stock for $12 a share and pays a 2% commission. She sells the stock 3 years
later for $18 a share and pays a 1% commission. What are her net proceeds?
24. Quinton bought x number of shares for p dollars and paid a 1% commission. He sold the stock for y dollars
and paid a flat fee of $7. Express Quinton’s net proceeds algebraically.
25. Katelyn owns 140 shares of a stock that sells for $39 a share before a 3-for-2 split is announced. After the
split, how many shares of the stock will Katelyn own and what will they be worth?
Post-split number of shares:
26. Mrs. Thomas owns 1,500 shares of a corporation that pays a quarterly dividend of $0.36 a share. How much
in dividends did she receive last year?
27. This information was posted at the end of the trading day on June 12.
52-week High
52-week
Low
Stock
Change
High
Low
64.89
50.34
ABC Inc
–2.03
60.18
54.42
212.65
189.40
XYZ Corp
–17.54
210.16
197.34
145.90
113.38
CAT Ltd
+8.92
132.75
127.89
What was the closing price of CAT Ltd on June 11?
28. A certain corporation listed their sales in 100s as 1700. What was their actual volume in thousands?
29. The information released on a particular corporation at closing shows a Chg of –2.35. What does this
mean?
30. The stock bar chart shows the market action for Dell during the week of May 4.
What was the day’s close on May 8?