HS 328 - Lesson 7 Exam Study Set
It is impossible to have a dividend payout ratio exceeding 100%.
a. True
b. False - ANSWER b. False
Explanation: The payout ratio could be the result of previous earnings or a form of
liquidation.
A stock paying a quarterly dividend of 28 cents and trading for $56 has a dividend yield
of 2%.
a. True
b. False - ANSWER a. True
Mr. James sells his XYZ stock on July 15, three days before the date of record but after
the date of declaration. Mr. James will receive the dividend.
a. True
b. False - ANSWER b. False
Explanation: He needed to hold the stock until the ex-dividend date or after.
A 25% stock dividend is expected to lower the price of a stock to 80% of its original
price.
a. True
b. False - ANSWER a. True
Some investors prefer capital appreciation rather than dividends.
a. True
b. False - ANSWER a. True
The choice of appreciation versus dividend income is often influenced by income tax
policy.
a. True
b. False - ANSWER a. True
The rights of shareholders include the right to receive a dividend, the right to vote for
board seats, and the obligation to vote in person at annual meetings.
,a. True
b. False - ANSWER b. False
Explanation: Shareholders can vote by proxy.
Straight voting protects minority shareholders.
a. True
b. False - ANSWER b. False
Explanation: Cumulative voting protects minority shareholders.
The right to maintain your proportional interest is called the preemptive right.
a. True
b. False - ANSWER a. True
The shareholders in a corporation have limited liability.
a. True
b. False - ANSWER a. True
Defensive stocks are generally less affected by changes in the economy than other
stocks.
a. True
b. False - ANSWER a. True
Cyclical stocks tend to lead or follow the economy.
a. True
b. False - ANSWER a. True
Value stocks are usually out of favor stocks with low PE ratios.
a. True
b. False - ANSWER a. True
One of the advantages of going public is liquidity.
a. True
b. False - ANSWER a. True
The primary market is where securities are initially offered to the public.
, a. True
b. False - ANSWER a. True
The secondary market consists of exchanges.
a. True
b. False - ANSWER a. True
Individuals are limited in the amount they can invest through crowdfunding.
a. True
b. False - ANSWER a. True
The S&P 500 Index is a price-weighted index.
a. True
b. False - ANSWER b. False
Explanation: It is a market-cap weighted index.
The Dow Jones Industrial Average (DJIA) is a market cap index.
a. True
b. False - ANSWER b. False
Explanation: The Dow Jones Industrial Average (DIJA) is a price-weighted index.
The Wilshire 5000 is a price-weighted index.
a. True
b. False - ANSWER b. False
Explanation: The Wilshire 5000 is a cap-weighted index.
Jayne bought 100 shares of ING for $10 each. She has a long position.
a. True
b. False - ANSWER a. True
Maya was a short seller of ABC stock. Before she closed her position ABC declared and
paid a dividend of $1 per share. Maya will have to pay $1 per share to the lender of the
stock.
a. True
b. False - ANSWER a. True
It is impossible to have a dividend payout ratio exceeding 100%.
a. True
b. False - ANSWER b. False
Explanation: The payout ratio could be the result of previous earnings or a form of
liquidation.
A stock paying a quarterly dividend of 28 cents and trading for $56 has a dividend yield
of 2%.
a. True
b. False - ANSWER a. True
Mr. James sells his XYZ stock on July 15, three days before the date of record but after
the date of declaration. Mr. James will receive the dividend.
a. True
b. False - ANSWER b. False
Explanation: He needed to hold the stock until the ex-dividend date or after.
A 25% stock dividend is expected to lower the price of a stock to 80% of its original
price.
a. True
b. False - ANSWER a. True
Some investors prefer capital appreciation rather than dividends.
a. True
b. False - ANSWER a. True
The choice of appreciation versus dividend income is often influenced by income tax
policy.
a. True
b. False - ANSWER a. True
The rights of shareholders include the right to receive a dividend, the right to vote for
board seats, and the obligation to vote in person at annual meetings.
,a. True
b. False - ANSWER b. False
Explanation: Shareholders can vote by proxy.
Straight voting protects minority shareholders.
a. True
b. False - ANSWER b. False
Explanation: Cumulative voting protects minority shareholders.
The right to maintain your proportional interest is called the preemptive right.
a. True
b. False - ANSWER a. True
The shareholders in a corporation have limited liability.
a. True
b. False - ANSWER a. True
Defensive stocks are generally less affected by changes in the economy than other
stocks.
a. True
b. False - ANSWER a. True
Cyclical stocks tend to lead or follow the economy.
a. True
b. False - ANSWER a. True
Value stocks are usually out of favor stocks with low PE ratios.
a. True
b. False - ANSWER a. True
One of the advantages of going public is liquidity.
a. True
b. False - ANSWER a. True
The primary market is where securities are initially offered to the public.
, a. True
b. False - ANSWER a. True
The secondary market consists of exchanges.
a. True
b. False - ANSWER a. True
Individuals are limited in the amount they can invest through crowdfunding.
a. True
b. False - ANSWER a. True
The S&P 500 Index is a price-weighted index.
a. True
b. False - ANSWER b. False
Explanation: It is a market-cap weighted index.
The Dow Jones Industrial Average (DJIA) is a market cap index.
a. True
b. False - ANSWER b. False
Explanation: The Dow Jones Industrial Average (DIJA) is a price-weighted index.
The Wilshire 5000 is a price-weighted index.
a. True
b. False - ANSWER b. False
Explanation: The Wilshire 5000 is a cap-weighted index.
Jayne bought 100 shares of ING for $10 each. She has a long position.
a. True
b. False - ANSWER a. True
Maya was a short seller of ABC stock. Before she closed her position ABC declared and
paid a dividend of $1 per share. Maya will have to pay $1 per share to the lender of the
stock.
a. True
b. False - ANSWER a. True
