Question

37._____According to your instructor, which of the following are important when determining whether to buy a stock in a non-financial company?

a. book value.

b. par value.

c. your determination of the stock’s investment (intrinsic) value.

d. market value.

e. all of the above.

f. none of the above.

g. more than one, but not all, of the above.

38._____A new, and not at all bad, alternative to reinvesting dividends through a dividend reinvestment arrangement, according to your insightful instructor, is

a. taking the dividends in cash.

b. investing the dividends in an index fund that has a $1 minimum for additional, or initial, investments.

c. both a and b.

d. neither a nor b.

39._____Ceteris paribus (“All other things being equal” in the language of the saints and scholars), on the ex-dividend date, the value of a stock

a. rises by the amount of the dividend.

b. falls by the amount of the dividend.

c. does nothing.

d. becomes incalculable.

e. becomes divorced from the amount of the dividend.

40._____All tech stocks trade on the NASDAQ

a. true

b. false

c. because the NASDAQ is cool.

d. because the NYSE is for dullards, louts, and Luddites.

Answer 1

37. (Option A) Book Value is the most important parameter to determine whether to buy a stock in a non-financial company. This is because it signifies the positioning of the price with respect to the market i.e. Overpriced or Underpriced.

38. (Option D) None of the method is suitable for the reinvestment of dividends.

39. (Option E) On Ex-dividend date, the Stock has already been detached from the dividend's affinity as it has already been recorded a day before the Ex-dividend date. So, the sentence clearly depicts the emotions i.e. It becomes divorced from the amount of dividend.

40. (Option A) Yes, All the tech stocks trade on NASDAQ as it has reputation of having fast growth stocks unlike NYSE which carries long established highly reputed firms.

Hope I have done justice to the explanation.