Group 1 Equity Quiz

Which is more suitable for long-term investing?

• Growth stocks

• Value stocks

When was the first IPO launched?

• 1600

• 1601

• 1602

• 1603

In the event that a company goes out of business, who is paid first?

• Bondholders

• Common stockholders

• Preferred stockholders

• Creditors

Which of the following is a hybrid of equity and fixed income?

• Common stock

• Callable stock

• Preference stock

• Participating stock

In public equity, all relevant information should be disclosed.

• True

• False

What is the correct formula for return on equity (ROE)?

• Stockholder's Equity / Net Income

• Net Income / Shareholder's Equity

• (Price(t)+Price(t-1)) / Price(t-1)

• (Price(t)+Price(t+1)) / Price(t+1)

Who of the following has voting rights?

• Bondholders

• Common stockholders

• Preference stockholders

• Creditors

What is the required rate of return (RRR)?

• The minimum return an investor will accept for owning a company

• The return a firm theoretically pays to its equity investor

• The interest attached to a fixed income investment

• The maximum return an investor will accept for owning a company

What characteristics do common and preference stocks share?

• Both give you voting rights

• Both have a par value that is affected by interest rates

• Both are paid out at the same time in the event of liquidation

• Both pay dividends

What's a leveraged buyout?

• When a company borrows a significant amount of money for an acquisition

• Buying shares of publicly traded stock at a price below its current value

• A type of financing investment given to startup companies who expect growth