Chaminade Univ MBA 754 (Investment Mgmt) Week 6 – Ch 06 Homework (Graded)

Grading SummaryThese
are the automatically computed results of your exam. Grades for essay
questions, and comments from your instructor, are in the “Details”
section below. Date Taken: Time Spent: Points Received:
Question
Type: # Of Questions: True/False 11 Multiple Choice 19

Grade
Details – All QuestionsQuestion 1. Question : The decision of how much money to
pay out in dividends is made by the
Student
Answer: board of directors.
company
shareholders.
chief
executive officer.
chief
financial officer.

Question
2. Question : Aggressive stock management
Student
Answer: is the riskiest of all the investment strategies.
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.

Question
3. Question : Investors should never pay more than par value for a stock.
Student
Answer: True False

Question
4. Question : Stocks generally have produced positive inflation-adjusted rates
of return over the long-term.
Student
Answer: True False

Question
5. Question : The par or stated value of common stock is important for
Student
Answer: accounting purposes only.
helping
the investor determine the stock’s intrinsic value.
helping
the board of directors determine the dividend payout.
helping
the market determine the trading price of the stock.

Question
6. Question : Shareholders who sell their stock on or after the ex-dividend
date, but before the date of record, will still receive the declared dividend.
Student
Answer: True False

Question
7. Question : When a company, working with an underwriter, offers the investing
public a certain number of shares of its stock at a certain price, the company
is making what is known as a
Student
Answer: public offering.
rights
offering.
stock
spin-off.
treasury
offering.

Question
8. Question : Dividend yield is calculated by dividing
Student
Answer: the market price of one share of stock by the annual dividend per share.
the
annual dividend per share by the market price of one share of stock.
earnings
per share by market price per share.
annual
dividend per share by earnings per share.

Question
9. Question : The common stock investment strategy that is the most basic
strategy and is popular with conservative, quality-conscious individuals
looking for competitive returns over the long run is the
Student
Answer: buy-and-hold strategy.
current
income strategy.
growth
strategy.
speculation
and short-term trading strategy.

Question
10. Question : Which one of the following statements about common stock is
correct?
Student
Answer: Each share of stock has a specified maturity date.
Common
stock gives stockholders first title to a share of the company’s earnings,
prior to other corporate obligations. Common stock typically provides higher
levels of current income than do similar grade corporate bonds. Each share of
common stock entitles the holder to an equal ownership position and an equal
vote in the corporation.

Question
11. Question : Treasury stock is a means of increasing the number of shares
outstanding.
Student
Answer: True False

Question
12. Question : There is a stronger tendency for the stock market to increase in
value rather than decrease in value over time.
Student
Answer: True False

Question
13. Question : Which one of the following investment strategies would NOT
appeal to an investor who is most concerned with storage of value?
Student
Answer: buy-and-hold
high
income
quality
long-term growth
speculation
and short-term trading

Question
14. Question : 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
Student
Answer: 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.

Question
15. Question : The investment value for a publicly traded stock can readily be
found in the financial section of the newspaper or on the internet.
Student
Answer: True False

Question
16. Question : The rate of return on a foreign investment is affected by
changes in the exchange rates.
Student
Answer: True False

Question
17. Question : As a general rule, which one of the following statements
concerning the various values of common stock is correct?
Student
Answer: Market values are usually below book values.
Par
values are usually above book values.
Market
values are usually below par values.
Book
values are usually below market values.

Question
18. Question : Tiffany owned 1000 shares of GIA stock which was selling for
$1.50 per share when the company declared a 1 for 10 reverse split. After the
split, Tiffany owned
Student
Answer: 10,000 shares worth approximately $1.50 per share.
10,000
shares worth approximately $0.15 per share.
100
shares worth approximately $15 per share.
100
shares worth approximately $1.50 per share.

Question
19. Question : ADRs
Student
Answer: represent ownership in unlisted domestic stocks.
pay
dividends in U.S. dollars.
receive
company dividends only in U.S. dollars.
are
subject to taxation only by the U.S. government.

Question
20. Question : Factors considered in making a decision on a firm’s dividend
include the
Student
Answer: II and IV only
I, II
and IV only
I, II
and III only
I, II,
III and IV

Question
21. Question : An individual stock generally provides a
Student
Answer: dividend payment that ensures total protection from purchasing power
risk.
refuge
from event risk.
lower
current income than that available from other types of investments.
predictable
annual rate of return.

Question
22. Question : Engines, Inc. declares a 2-for-5 stock split. The stock
currently sells for $3 a share. A shareholder who owned 100 shares of stock
prior to the split will now own
Student
Answer: 40 shares valued at about $7.50 a share.
40
shares valued at about $1.20 a share.
250
shares valued at about $7.50 a share.
250
shares valued at about $1.20 a share.

Question
23. Question : The value that represents the amount of stockholders’ equity in
a firm is called the
Student
Answer: par value.
book
value.
liquidation
value.
market
value.

Question
24. Question : Over the last 10 years, what percentage of the total return on
typical stocks in the Dow Jones average has come from dividends?
Student
Answer: 0% to 1.0%
2% to
4%
8% to
10%
More
than 10%

Question
25. Question : Treasury stock can be used to do which of the following?
Student
Answer: I and III only
II and
IV only
III
and IV only
I, III
and IV only

Question
26. Question : Shares of publicly traded stock can be issued either through a
public offering or a rights offering.
Student
Answer: True False

Question
27. Question : Over the 50-year period of 1953-2002, the stock market provided
an average annual rate of return of approximately 11%.
Student
Answer: True False

Question
28. Question : If a firm has a 2 million shares outstanding and its stock
trades at $25, the company has a market capitalization of $50,000,000.
Student
Answer: True False

Question
29. Question : Typical characteristics of growth stocks include
Student
Answer: rapidly growing dividends.
high
rates of growth in operations and earnings.
acquisitions
of competing companies.
strong
performance even in market downturns.

Question
30. Question : Every shareholder is a part owner of the firm and, as such, has
a direct claim on a portion of the firm’s assets.
Student
Answer: True False