Financial Products: Mutual Funds & Other Investment Products

Question 1

The market price of the stock is a reflection of the potential earnings per share of the company.

Answer 1

TRUE

Question 2

Some companies distribute earnings per share in the form of dividends, and some retain these earnings for future investment in the firm.

Answer 2

TRUE

Question 3

In the event of bankruptcy, bondholders’ claims are paid before preferred stockholders’ claims.

Answer 3

TRUE

Question 4

Preferred stockholders have more voting rights than common stockholders.

Answer 4

FALSE

Question 5

The issuer of the bond is loaning money to the bondholder when the bond is purchased.

Answer 5

FALSE

Question 6

Gold, precious metals, and other collectibles always earn handsome returns.

Answer 6

FALSE

Question 7

The main advantage to investing in direct real estate is liquidity.

Answer 7

FALSE

Question 8

The Dow Jones Industrial Average is based on the movement of 500 stocks, primarily from the NYSE.

Answer 8

FALSE

Question 9

Failure to pay dividends to preferred stockholders puts the company in bankruptcy.

Answer 9

FALSE

Question 10

Secondary market is of no concern to the stock issuer.

Answer 10

FALSE