Investment Basics
- 1.Ben owns stock in Apple, which is currently paying $2.65 in annual dividends. Ben is guaranteed to receive a dividend as long as he owns Apple stock.
- A.
True
- B.
False
- 2.What are the way(s) that a company can use the profits that their business generates?
- A.
Invest in their own business
- B.
Pay dividend to shareholders
- C.
Acquire other companies
- D.
All of the above
- 3._________________ for a company comes from the sale of its goods and services to customers. For example, McDonald's ________ comes from selling Big Macs, shakes and other food products.
- A.
Costs
- B.
Revenue
- C.
Expenses
- D.
Income Statement
- 4.Victor owns 100 shares of Starbucks stock. Starbucks pays an ANNUAL dividend of $1.00 (note that companies typically pay dividends quarterly). Victor will receive his first QUARTERLY dividend on September 30th. The dividend check will be for:
- A.
$100
- B.
$1.00
- C.
$25
- D.
Zero
- 5.Taking a company's earnings and dividing by the number of shares of the company's stock that is outstanding results in a company's ________________
- A.
Dividend Yield
- B.
EPS (Earnings Per Share)
- C.
Market Capitalization
- D.
None of the above
- 6.One difference between investing in stocks and savings accounts is:
- A.
Savings accounts trade on an exchange while stocks do not
- B.
An investor can always earn more from savings account than from investing in a stock
- C.
Savings accounts are more risky than investing in stocks
- D.
An investor can lose money investing in stocks but won't lose money from a savings account with FDIC insurance
- 7.Owning a share of a stock in a company means:
- A.
You own part of a company
- B.
You are eligible to receive a dividend from a company (if they pay dividends)
- C.
You have a vote in selecting the members of their Board of Directors
- D.
All of the above
- E.
None of the above
- 8.According to Peter Lynch, when you invest in a company by buying their shares, you should invest for the long-term. What is the long-term in Peter Lynch's view?
- A.
1 year
- B.
5 years
- C.
20 years
- D.
10 years
- 9.The higher the risk in an investment, the higher the expected return. For example, an investor like Ben who invests in start-up technology companies expects to earn a higher return than an investor in a large established company like Starbucks since the start-up is higher-risk.
- A.
True
- B.
False
- 10.The S&P500, NASDAQ and Dow Jones are examples of:
- A.
Stock reports
- B.
Companies
- C.
Stock indices (plural of index)
- D.
Stock exchanges
- 11.Home Depot pays an annual dividend of $1.20. Their current stock price is $57.00. Calculate their dividend yield.
- A.
2.1%
- B.
12.0%
- C.
20.2%
- D.
5.4%
- 12.This week, Nike's stock rose from $50 to $53 per share. Starbucks rose from $20 to $30 per share and Jamba Juice rose from $2.50 to $5.00 per share. Which stock had the highest percentage gain in value?
- A.
Starbucks
- B.
Nike
- C.
Jamba Juice
- 13.If Wal-Mart's EPS (Earnings per Share) is $4 and its stock is currently trading at $60 per share, then its P/E (Price to Earnings ratio) is ___________
- A.
12
- B.
20
- C.
15
- D.
Other
- 14.Holding stocks from different sectors (or industries) helps an investor achieve what goal?
- A.
Marginalization
- B.
Valuation
- C.
Growth
- D.
Diversification
- 15.David buys 100 shares of Pepsi at $33 per share. In one year, he sells his Pepsi stock for $40 per share. He also receives a $1.00 per share dividend during his one year holding period. His total GAIN is:
- A.
$700
- B.
$500
- C.
$800
- D.
None of the above
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