BUSI 223 Read & Interact Dlabay, Hart, Hughes, & Kapoor Chapter 14-16 solutions complete answers

BUSI 223 Read & Interact Dlabay, Hart, Hughes, & Kapoor Chapter 14-16 solutions complete answers

 

Value Line and Morningstar are two Blank______ that provide detailed information on mutual funds.

 

Before beginning a mutual fund investment program, you should:

 

The average load charge for mutual funds is between  % and  %.

 

Which of the following are reasons why investors choose mutual funds?

 

According to Standard & Poor's, bond issues in default would have which rating?

 

U.S. treasuries are a very low-risk investment that many investors use to allocate their investments and bring their overall risk down. Because of this low risk, there is also a low   rate.

 

For a corporation, a disadvantage of selling bonds is that in the event of bankruptcy, bondholders:

 

A   is a corporate bond that is backed only by the reputation of the issuing company.

 

When dealing with an account executive, it is a good idea to:

 

A   is a legal form that requests that stockholders transfer their voting rights to someone within the organization who know the situations of the company better.

 

A corporation's earnings divided by the number of outstanding shares of a firm's common stock is called Blank______.

 

Beginning investors must find:

 

A legal form that lists the issues to be decided at a stockholders' meeting and requests that stockholders transfer their voting rights to some individuals or individual is called:

 

The more       an investment has to work, the more money it will likely accumulate.

 

Which category of stockholder receives dividends first?

 

A stock issued by a corporation that has the potential of earning profits above the average profits of all economies is known as what type of stock?

 

Which of the following must new investors master to become more proficient investors?

 

A company's Web site that can be viewed anytime is:

 

A       is a legal form that request that stockholders transfer their voting rights to someone within the organization who know the situations of the company better.

 

Which of the following is NOT a widely used stock advisory service that provides detailed research?

 

The key element to investing is:

 

All newspapers:

 

An advantage of being a preferred stockholder is the ability to receive cash       payments before common stockholders.

 

A corporation's earnings divided by number of outstanding shares of a firm's common stock is called

 

Match stocks with their characteristic.

 

Which of the following exists to provide estimates of price-earnings ratios and earnings per share?

 

Information on companies' Web sites is likely to be:

 

The percentage of a firm's earnings paid to stockholders in cash is called:

 

True or false: There are alternative sources for stock advisory services.

 

A measure that compares the volatility associated with a specific stock issue with the volatility of the Standard and Poor's 500 stock index is called:

 

A daily source of printed material that provides useful information about stocks is a(n):

 

An investment practice that is based on the assumption that a stock's intrinsic or real value is determined by the company's future earnings is known as       analysis.

 

Earnings per share is equal to       income divided by the number of outstanding       of a firm's common stock.

 

A market in which an investor purchases financial securities via an investment bank or other representative from the issuer of the securities is called a(n):

 

Earnings per share and price-earnings ratios are based on:

 

A securities exchange is a marketplace where member brokers who represent      , buy and sell securities.

 

A dividend payout is the percentage of a firm's earnings paid to       in cash.

 

A licensed individual who buys or sells securities for clients is oftentimes called a(n):

 

Beta is a measure that compares the volatility associated with a specific stock issue with the volatility of the:

 

Joanne has never invested before. John recommends a(n)             brokerage firm to help her get started in investing.

 

An investment practice based on the assumption that a stock's intrinsic or real value is determined by the company's future earnings is called:

 

When purchasing a stock, the brokerage firm will usually charge a minimum commission between $      and $     .

 

A(n)       market is a market in which an investor purchases financial securities via an investment bank or other representative from the issuer of those securities.

 

A       order is a request to buy or sell a stock at the current price.

 

A marketplace where member brokers who represent investors meet to buy and sell securities is called a(n):

 

True or false: An account executive is also called a stockbroker.

 

The sooner you invest, the longer your investment will have to      .

 

Match typical clients with the type of brokerage firm recommended.

 

The buy-and-hold technique increases value in what two ways?

 

You purchased Krispy Kreme stock valued at $12,000. Your full-service investment company charges $5 for commission. What is the total cost of the stock purchase?

 

An individual who buys and sells stock and other securities in a very short period of time is called a:

 

The request to buy or sell a stock at the current market value is called a:

 

Unlike stocks and mutual funds, which investment type is known for safety?

 

A corporation's written pledge to repay a specified amount of money with interest is called a:

 

It is better to invest:

 

Which of the following are reasons why corporations sell bonds?

 

The buy-and-hold technique includes the reinvestment of:

 

For the bondholder, an advantage of bonds over stocks is that the face value of a bond and       payments are required.

 

A day trader is an individual who buys and then later sells stock and other securities in a very       period of time.

 

A corporation fails to make interest payments; therefore debenture bondholders become general      , much like the firm's suppliers.

 

Which type of investment often returns more than other investment alternatives like bonds, yet it is also more risky?

 

A call feature allows the corporation to buy outstanding bonds from current bondholders       the       date.

 

A corporate bond is a corporation's written pledge to repay a specified amount of money along with      .

 

Which of the following is NOT a reason why investors purchase corporate bonds?

 

Corporations may sell       in an attempt to raise money for ongoing activities.

 

A       bond is registered in the owner's name.

 

One advantage of selling bonds for a corporation is that the use of       funds can be used to increase the corporation's       on      .

 

If the corporation fails to make either interest payments or repayment at maturity, debenture bondholders become:

 

Yield is the percentage rate of       earned by an investor who holds a       for a stated period of time.

 

A feature that allows the corporation to call in or buy outstanding bonds from current bondholders before the maturity date is a:

 

A strategy where investors divide their investment dollars among bonds that mature at regular intervals in order to balance risk and return is called a(n):

bond ladder

 

True or false: Investors purchase corporate bonds for interest income, increase in value, and repayment at maturity.

 

The advantage for an investor to trade bonds through an online broker is discounted commissions on trades.

 

A bond that is registered in the owner's name by the issuing company is called a:

 

For treasury securities, if investors bid      , they must specify the rate of interest yield they are willing to accept.

 

From a corporation's perspective, bonds have disadvantages of asset claims and interest payments because both of these are      .

 

The rate of return earned by an investor who holds a bond for a stated period of time is called:

 

There may be differences in how interest is paid when comparing Treasury securities and __________.

 

A bond ladder is where an investor seeks to balance       and return.

 

Municipal bonds are used to finance which of the following?

 

A typical bond transaction would NOT include:

 

Which is used to provide up-to-date price, research, and lower commission for bonds?

 

For treasury securities, most investors are willing to accept the interest rate determined at auction so they are using:

 

Bond quotations are given as a       of face value.

 

The easiest way to obtain an annual report is to go to the corporation's      . This method allows you access to information any time that is convenient for you.

 

Federal agency debt issues have a slightly higher risk than government securities therefore a slightly higher       rate or rate of return.

 

For Standard & Poor's, the bond ratings generally range from:

 

A municipal bond is a debt security issued by a       or local municipal      .

 

Three ways that the Internet can help you invest in bonds are:

 

Yield to maturity is a calculation that takes into account the relationship among a bond's maturity value, the time to maturity, the current      , and the dollar amount of      .

 

A price quote of 79 means:

 

The U.S. treasury is an example of a:

 

Which of the following is not a way to obtain an annual report?

 

Which of the following best defines a mutual fund?

 

According to Standard and Poor's, bond issues in default would have which rating?

 

Investors choose mutual funds for their investments because they offer professional management and       by allocating funds to various alternatives.

 

Which of the following are typical types of mutual funds?

 

A yield calculation that takes into account the relationship among a bond's maturity value, the time to maturity, the current price, and the dollar amount of interest is called:

 

A(n)      -end fund issues shares only when it is organized and its shares are usually traded on a stock exchange.

 

Business periodicals and federal agency publications are two additional sources of information that can be valuable when evaluating:

 

      traded funds invest in the stocks or securities contained in a specific stock or securities index.

 

A mutual       is an investment company that pools investors' money to invest in various securities.

 

People often buy             when they lack enough money to diversify their investments among several stocks.

 

The three general types of mutual funds are      -end,      -traded, and open-end funds.

 

Which of the following is true about an open-end mutual fund?

 

True or false: To purchase a closed-end mutual fund, you would purchase shares directly from the mutual fund company at any time.

 

Which of the following is the correct formula for NAV?

 

Exchange-traded funds invest in the stocks or securities contained in a specific stock or securities      .

 

A       fund is a mutual fund that charges as much as 8 1/2% every time an investor purchases shares.

 

True or false: A no-load fund does not have a sales charge.

 

Which of the following (select all that apply) are reasons why investors choose mutual funds?

 

Aggressive growth funds seek:

 

With a(n)      -end fund, the shares are issued and redeemed by the investment company at the request of the investors rather than purchased and sold on securities exchanges.

 

Intermediate bond funds usually invest bonds maturing in       to       years.

 

The net asset value is calculated by dividing the current       value of the fund's portfolio (reduced by liabilities) by the number of outstanding shares.

 

What types of securities do asset allocation funds invest in?

 

The maximum sales fee on a load fund is ______%..

 

Investors often think they do not need to evaluate a mutual fund because each fund has a       manager.

 

A(n)      -load mutual fund does not have a sales charge.

 

When the Standard & Poor's 500 index increases, index mutual funds that invest in these stocks      .

 

Funds categorized as       growth funds seek rapid growth by purchasing stocks whose price is expected to increase dramatically in a short period of time.

 

Before beginning a mutual fund investment program you should:

 

A long-term corporate bond fund usually invests in:

 

Which of the following is not a source of information about mutual funds on the Internet?

 

Asset allocation funds typically invest in:

 

When deciding to buy a mutual fund:

 

Julie has invested in a mutual fund tied to the NASDAQ index. What relationship will her fund have with the index in terms of price fluctuation?

 

Standard and Poor's and Morningstar are two _________ that provide detailed information on mutual funds.

 

Which of the following should you do before investing in mutual funds?

 

Professional financial       services offer online research reports about mutual funds.

 

A mutual fund company must provide a prospective investor with a prospectus       the fund is purchased.

 

One of the major advantages of investing in mutual funds is       because the fund manager is investing in many different stock and/or bonds.

 

Shareholders in mutual funds can receive a return on their investment in one of       ways.

 

Which of the following are subscription services that provide detailed mutual fund information?

 

True or false: There is normally more than one way to purchase mutual funds.

 

You can request an annual report for a mutual fund by calling a toll-free number, by      , or accessing the investment company's      .

 

There are many advantages to investing in mutual funds such as:

 

Shareholders in mutual funds can receive return on investment:

 

Mutual funds can be purchased:

 

Which of the following is defined as the date when a stock trades "without dividend" and the seller is entitled to a declared dividend payment?

 

Smith Corporation declared a quarterly dividend of $0.67 per share to stockholders. The record date is Friday, April 8th, the ex-dividend date is Wednesday, April 6th, and the payable date is Monday, May 9th for this dividend. If Samantha owns 250 shares of Smith stock on Friday, April 8th, what is her quarterly dividend amount?

 

Hammerhead Corporation declared a quarterly dividend of $0.84 per share to stockholders. The record date is Friday, March 11th, the ex-dividend date is Wednesday, March 9th, and the payable date is Monday, April 11th for this dividend. Chris purchased 50 shares on January 1st, Adam purchased 100 shares on March 8th, and Emma purchased 65 shares on March 10th. Who is eligible to receive this quarterly dividend?

 

Based on the example in the video, all of the following pieces of information can be found at the top portion of the Value Line report, except:



 

Based on the example in the video, all of the following pieces of information can be found in the middle section of the Value Line report, except:



What is one additional way, according to the video, that an individual can utilize the information to decide if the stock is the right choice for their investment program?

 

Hannah purchased 65 shares of Best Buy stock at $36 per share. After 3 years, Hannah sold the stock for $43 per share. During the time she held the stock, Hannah received the dividends totaling $4.00 per share. What is Hannah's total return?

 

Nicholas initially invested $2,400 in a technology company two years ago. The total return when he sold the stock was $600. What was his annualized holding period return?

 

Five years ago, Greg initially invested $7,000 in a transportation company. The total return when he sold the stock was $3,000. What was his annualized holding period return?

 

Alan currently has the money to purchase only 125 shares of Hurricane Corporation. Hurricane's shares are currently selling for $34 per share. If Alan uses the current margin requirements to purchase 250 shares of Hurricane stock, what is the amount of the total investment?

 

Olivia currently has the money to purchase only 75 shares of Tumble Corporation. Tumble's shares are currently selling for $82 per share. If Olivia uses the current margin requirements to purchase 150 shares of Tumble stock, what is the amount of money that she personally has invested in the company?

 

What are the risks associated with using the margin strategy?

 

Angela believes that Beamer Corporation's stock will drop in value. She borrows 150 shares from a brokerage firm when the stock was selling at $42 per share. When the stock's price dropped to $27 per share, she told the brokerage firm to buy 150 shares of Beamer stock. This stock was returned to the brokerage firm in replace of the stock she first borrowed. What is Angela's profit on her short selling investment?

 

Kerri believes that Bluebill Corporation's stock will drop in value. She borrows 200 shares from a brokerage firm when the stock was selling at $56 per share. When the stock's price dropped to $31 per share, she told the brokerage firm to buy 200 shares of Bluebill's stock. This stock was returned to the brokerage firm in replace of the stock she first borrowed. What is Kerri's profit on her short selling investment?

 

According to the video, in order to make money by selling short, what must you be correct in predicting?

 

Betty and John Martinez own 180 shares of McDonald's common stock. McDonald's annual dividend is $4.04 per share. What is the amount of the dividend check the Martinez couple will receive for this year?

 

In March, stockholders of Herbalife Nutrition approved a 2-for-1 stock split. After the split, how many shares of Herbalife stock will an investor have if she or he owned 160 shares before the split?

 

Tammy Jackson purchased 100 shares of All-American Manufacturing Company stock at $31.50 a share. One year later, she sold the stock for $38 a share. She paid her broker a $15 commission when she purchased the stock and a $29 commission when she sold it. During the 12 months she owned the stock, she received $160 in dividends. Calculate Tammy's total return on this investment.

 

James Hayes owns 370 shares of Ohio Utility preferred stock. If this preferred stock issue pays $1.90 per share each year, what is the total dollar amount Mr. Hayes will receive in one year?

 

Assume you own shares in Walmart and that the company currently earns $3.28 per share and pays annual dividend payments that total $2.08 a share each year. Calculate the dividend payout for Walmart.

 

Nancy Cardoza invested $2,450 in ExxonMobil stock because her research indicated the company should average a return for investors of 8 percent over the next 4 years. If ExxonMobil investors do earn 8 percent each year, what will her $2,450 investment be worth at the end of four years?

 

Carl Patterson likes investing in stocks that pay dividends. Carl owns 60 shares of a local utility company. The stock pays a regular annual dividend in the amount of $3.50 per share, and the company has indicated that the dividend will stay the same for a long time. If Carl reinvests his dividends each year and the dividends earn a return of 6 percent each year, how much will Carl accumulate in 15 years?

 

Which of the following is not an advantage of investing in preferred stocks?



A stock issued by a corporation that has capitalization of between $2 and $10 billion is known as what kind of stock?

 

Investors may choose preferred stock because it offers a predictable source of

 

What is determined by deducting all liabilities from the corporation's assets and dividing the remainder by the number of outstanding shares of common stock?



Earning estimates exist to provide estimates of which of the following?



Book value is determined by deducting all __________ from the corporation's assets and dividing the remainder by the number of outstanding shares of common stock.

 

Securities sold at a particular exchange must be first __________, or __________ for trading.

 

When buying stock on margin, the current margin requirement is __________%.

 

True or false: Buying long is the idea that when you buy a stock, it will decrease in value.

 

Buying on margin is a technique whereby an investor borrows part of the money needed to buy a particular __________.

 

The strategy of buying a stock hoping it will increase in value over time is called:

 

After researching Best Buy common stock, Sally Jackson is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 200 shares of Best Buy. At the time of the sale, a share of common stock had a value of $34. Three months later, Best Buy is selling for $25 a share, and Sally instructs her broker to cover her short transaction. Total commissions to buy and sell the stock were $74. What is her profit for this short transaction?

 

A speculative technique whereby an investor borrows part of the money needed to buy a particular stock is called:

 

The annualized holding period yield calculation takes into account the time the investment is held.

 

A securities exchange is a marketplace where member brokers, who represent investors, meet to buy and sell securities.

 

Most speculators purchase stock and hold onto it for a number of years.

 

Valerie Kilmer owns stock in the Williams Widget Company. She was just advised that in the near future she will be receiving two shares for every one share she owns today. What has the company declared that will cause this change to her shares?

 

Lindsey Holt owns stock in the Galloway Gems Company. She knows in advance that the dividend on this stock is a $1.50 per share.. Given this, you know for sure that she purchased which type of stock?

 

Regarding a stock split, the earnings "pie" before the split is ____ size after the split.

 

A safe investment that generally attracts conservative investors is called a ____________ stock.

 

Kay Powers wants to diversify her portfolio by investing in a firm that has the potential to earn above average profits compared to other firms in the economy. What type of stock is Kay thinking about adding to her portfolio?

 

An investment theory based on the assumption that a stock's market value is determined by the forces of supply and demand in the stock market as a whole is called the ____________ theory.

 

If the corporation has a bad year, the board of directors generally may vote to:

 

For a bond, the maturity date is the date on which the corporation is to repay the borrowed __________.

 

For a corporate bond, the date on which the corporation is to repay the borrowed money is called:

 

An investor may prefer stocks over bonds because of the possible increase in

 

A corporate __________ is a bond that is backed only by the reputation of the issuing company.

 

A mortgage bond is a corporate bond secured by various __________ of the issuing __________.

 

An unsecured bond that gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments, repayment, and assets is called a:

 

A bond that can be exchanged, at the owner's option, for a specified number of shares of the corporation's common stock is called a:

 

A corporate bond secured by various assets of the issuing firm is called a:

 

True or false: Subordinated debentures are less risky than mortgage bonds.

 

A __________ bond is a bond that can be exchanged, at the owner's option, for a specified number of shares of the corporation's common __________.

 

True or false: For the investor, a debenture is generally safer than a mortgage bond.

 

When book entry is used, ______ are usually listed as the owners of the bonds.

 

One disadvantage of investing in U.S. treasuries is:

 

Municipal bonds are used to finance ongoing activities of the __________ and __________ governments.

 

A debt security issued by a state or local government is called a:

 

Bonds that are judged to be of the best quality would have which rating?

 

Over the life of a bond there are two sources of return: __________ received from the purchase date until maturity and the repayment of the __________ value of the bond.

 

Determined by dividing the annual dollar amount of interest generated by an investment's current market value is called:

 

Over the entire life of the bond, there will be:

 

Current yield is determined by dividing the annual dollar amount of interest generated by an investment by the investment's current __________ __________.

 

All of the following are true of mortgage bonds, except:



All of the following are true of convertible corporate bonds, except:



All of the following are true of high-yield bonds, except:



Jaylyn owns a $1,000 Exxon corporate bond that pays 5.7% annually. After signing the paperwork, Jaylyn realized that the bond pays interest semi-annually. What is the amount of Jaylyn's semi-annual interest payments?

 

Allie purchased a $1,000 Courtstreet bond that pays 6.3% annually. Six years later, new corporate bond issues with comparable quality are paying 4.6%. What is the approximate market value for Allie's bond?

 

When the interest rate for comparable bonds is _________ than the interest rate for your bond, the approximate market value for your bond will ______________.

 

All of these are considered characteristics of Treasury Bills or T-Bills, except:



All of these are considered characteristics of Treasury Notes, except:



The principal or face value of Treasury Inflation-Protected Securities (TIPS) _____________ with inflation and interest payments ______________ with inflation.

 

Which of the following is defined as a bond that is backed by the full faith, credit, and unlimited taxing power of the government that issued it?

 

Jennifer is trying to decide if she should invest in a municipal bond issued by the state of North Carolina that pays 6% or a corporate bond issued by Hess Corporation that pays 8%. Jennifer's current tax rate is 33%. What is the tax-equivalent yield for the North Carolina bond?

 

All of the following are true of municipal bonds, except:



A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

 

Although unpopular a few years back, more and more U.S. corporations are issuing bearer bonds.

 

You own a $1,000 bond that pays 9 percent interest. What is the amount of interest you will receive each six months?

 

Which one of the following statements is correct regarding bond and stock differences?



A call feature:

 

Which type of bond would provide a high degree of price stability, because the bonds are not very sensitive to changing interest rates?

 

Why do corporations sell bonds?



Tom McCallister buys a bond that the company can retire before maturity if they wish. What type of bond has Tom purchased?

 

Which one of the following bonds would likely have the lowest risk?



For Moody's and Standard & Poor's, the first _____ bond-rating categories represent investments suitable for conservative investors who want a safe investment that provides a predictable source of income.

 

People often select mutual funds for all of these reasons EXCEPT.

 

Why are no-load funds free of commissions?

 

One benefit of investing in a no-load fund over a load mutual fund would be (found in discussion of no-load funds):

 

A load fund investor pays as much as ____% commission every time shares are purchased.

 

A contingent deferred sales load can range from __________% to __________% of withdrawals depending on how long you own the fund before making the withdrawal.

 

You can get a mutual fund prospectus:

 

What types of information about mutual funds can be found in typical newspaper coverage?

 

Which of the following is NOT typically found in newspaper coverage of mutual funds?

 

Most metropolitan newspapers and The __________ __________ Journal include mutual fund information daily.

 

For a mutual fund, the __________ ratio measures the percentage of a fund's holdings that have changed or been replaced during a 12-month period.

 

An open-end mutual fund is purchased:

 

A higher mutual fund turnover ratio often results in higher fund __________.

 

When shares are sold back to the investment company that sponsors the fund, the fund is:

 

Which funds are listed on an exchange or are traded in the over-the-counter market, making it possible to sell your shares to another investor?

 

For a mutual fund, the turnover ratio measures the __________ of a fund's holdings that have changed or been replaced during a __________-month period.

 

Systematic withdrawals from a mutual fund may be made:

 

You can buy __________-end funds and __________-traded funds through a securities exchange.

 

What determines the prices for shares for closed-end funds?

 

Crystal Ventures Mutual Fund contains stocks and securities valued at $476 million. The fund has liabilities that total to $6.3 million and the fund has issued 31 million shares. What is the Net Asset Value?

 

David invested $18,000 in the American Funds Euro-Pacific Growth fund. This fund charges a sales charge of 6.22%. What is the dollar amount of the sales charge to purchase shares?

 

Taliyah invested $21,000 in the American Funds Euro-Pacific Growth fund. This fund charges a sales charge of 4.35%. What is the net amount available for investment?

 

Lesley purchased 250 mutual fund shares at $18 per share. Lesley decided to sell her shares after the price increased to $29 per share. What is Lesley's capital gain?

 

Julie Martin is investing $48,000 in the Invesco Charter mutual fund. The fund charges a 5.50 percent commission when shares are purchased. Calculate the amount of commission Julie must pay.

 

Ted Paulson needed money to pay for unexpected medical bills. To obtain $12,000, he decided to sell some of his shares in the Ridgemoor Capital Appreciation Fund. When he called the investment company, he was told that the following fees would be charged to sell his B shares:



Nina Collins purchased the New Dimensions bond fund. While this fund doesn't charge a front-end load, it does charge a contingent deferred sales load of 4 percent for any withdrawals in the first five years. If Mary withdraws $6,200 during the second year, how much is the contingent deferred sales load?

 

Mathew Johnston invested a total of $52,000 in the New Colony Pacific Region mutual fund. The management fee for this particular fund is 0.80 percent of the total asset value. Calculate the management fee Mike must pay this year.



Today, there are more investment companies that offer closed-end funds than there are that offer open-end funds.

 

There are more investment companies that offer exchange-traded funds than there are that offer open-end mutual funds.

 

High-yield bond funds are sometimes referred to as junk-bond funds.

 

An investment company sponsoring a mutual fund must give existing shareholders a prospectus.

 

A mutual fund in which shares are issued only when the fund is organized is called a ____________ fund.

 

The New American Enterprise Mutual Fund's portfolio is valued at $60 million. The fund has liabilities of $2 million, and the investment company sponsoring the fund has issued 2,900,000 shares. What is the fund's net asset value?

 

A mutual fund that only invests in companies outside the United States is called a(n) ____________ fund.

 

Which one of the following statements is false?



Which of the following options can a mutual fund investor use to purchase shares in an open-end fund?



Which of the following states that it is impossible to consistently beat the market without raising your risk level?