Fin 200 - BYU (Exam 2)Questions With 100% Correct Solutions.

People who execute stock trades for others at the NYSE are called A) day traders. B) floor traders. C) stock traders. D) commission traders. - Answer-B) floor traders The ________ is not a physical location, but rather an electronic communications network to buy and sell stocks. A) NYSE B) NYSE MKT LLC C) NASDAQ D) Securities and Exchange Commission (SEC) - Answer-C) NASDAQ A stock dividend is distributed to the company's A) individual creditors. B) bank lenders. C) suppliers. D) stockholders. - Answer-D) stockholders. A PE of 10 means that the firm's stock price is ten times the firm's A) earnings per share. B) book value. C) net income. D) dividends. - Answer-A) earnings per share. A company's earnings are $3 per share, its dividend is $2 per share, and its stock price is $30 per share. Its PE ratio is A) 15. B) 10.C) 1.5. D) 33. - Answer-B) 10. Stocks that are subject to more uncertainty tend to have a A) wider range in prices over time. B) narrower range in prices over time. C) higher closing price. D) higher annual dividend. - Answer-A) wider range in prices over time. Companies A and B are both in the same industry and generally compete against each other in the marketplace. Stock A has a P/E ratio of 15 while Stock B's P/E is 21. Which of the following is not true about the relative positioning of Stock A and Stock B? A) Stock B has lower perceived risk. B) Investors are willing to pay a higher price for shares in Company B. C) Company A's business performance is probably not as strong as Company B's performance. D) All of the statements are correct. - Answer-A) Stock B has lower perceived risk. Company X pays out 100% of its earnings in the form of annual dividends. Last year, the company paid $5.25 in dividends for the year. If the stock price is $105 per share, what is the "trailing" P/E? A) 15.0 B) 10.0 C) 17.5 D) 20.0 - Answer-D) 20.0