Questions for the SERIES-7 were updated on : Nov 21 ,2025
The Bubba Corporation has 900,000 of common outstanding and holds 100,000 shares as treasury
stock. At the end of the third quarter $450,000 is distributed as a dividend on the common.
How much is the dividend per share?
A
Explanation:
$0.45. Since treasury stock does not receive dividends, divide $450,000 by the outstanding 100,000
shares to arrive at $0.45 per share.
A large manufacturing company has current assets of approximately $9,400,000 and current
liabilities of about $4,900,000.
Which of the following statements is true about the current ratio?
B
Explanation:
it is somewhat below the standard minimum. The standard minimum current ratio for a
manufacturing company is 2 to 1. The current ratio for this company is 1.92 (9,400,000 divided by
4,900,000).
Which of the following is normally the largest asset of a manufacturing company?
B
Explanation:
inventory. A manufacturer will normally have more inventory than accounts receivable and notes
receivable. Sales is not an asset category.
Bubba Corporation has net income of $4,200,000. It has 100,000 outstanding shares of 8% preferred
stock ($100 par value) and 400,000 shares of common stock ($10 par value).
What are the earnings per share of common stock?
A
Explanation:
$8.50. Subtract the preferred dividend of $800,000 (100,000 x 8% x 100) from the net income. Divide
the result of $3,400,000 ($4,200,000 - $800,000) by the 400,000 common shares to obtain $8.50.
Which of the following items is not deducted to determine a corporation’s net income?
B
Explanation:
dividends. Net income is determined before dividends.
Book value of a corporation is also known as:
A
Explanation:
net tangible asset value per share. Book value is much easier to say.
Which of the following is considered an intangible asset?
B
Explanation:
trademarks. Intangible assets are those whose true value cannot be determined, but there is some
supposed market value.
A company earns $6 per share and pays out 20% in common stock dividends.
What does the stock yield if it sells at $30 per share?
B
Explanation:
4%. The dividend is $1.20 per share ($6 x 20%). Divide this by the stock price to obtain the yield.
Which of the following best describes depreciation?
B
Explanation:
deductions from gross income to offset lower value of equipment. Depreciation is the deduction of
costs for capital assets as their value declines.
A leveraged company is best described as one that has a small portion of its capitalization
represented by:
A
Explanation:
common stock. Leverage refers to the existence of securities that are senior to common stock. There
can be debt leverage and equity leverage.
After an extended period of backing and filling, a stock moves up sharply through a resistance level
on heavy volume. A technical analyst would likely call this a:
D
Explanation:
breakout. An upward move through a resistance level that is confirmed by heavy volume is called a
breakout.
The market theory stating that the small investor is usually wrong is called the:
B
Explanation:
The market theory stating that the small investor is usually wrong is called the odd-lot theory. The
concept behind this theory is that when small lot sales are high, it is a good time to buy, as a high
ratio of small business sales is a contrary indicator of market direction.
Which of the following persons would consider annual reports of a corporation as the most
important factor in making investment decisions?
D
Explanation:
a fundamental analyst. These analysts are guided by computations about a company’s performance
using data in annual reports.
The accounting statement that represents a company’s financial position on a particular date is the:
B
Explanation:
balance sheet. This report reflects the entire condition of the company by showing all assets,
liabilities, and components of net worth.
When a corporation issues a nonconvertible debenture, what is the effect upon its net worth?
C
Explanation:
it is unchanged. The debentures add to liabilities and to cash (an asset) received from the sale. There
is no effect on net worth.