Question 1

The higher the risk associated with a bond issue,the ________ the interest rate the organization must offer investors.

Accepted Answer

A)   higher
B)   lower
C)   more stable
D)   less stableE) B) and C)
F) A) and B)

Question 2

Securities markets provide private investors a place to buy and sell stocks,bonds,and mutual funds.

Accepted Answer

A) True 
 B)False

Question 3

Investors and corporations are on the opposite sides of the interest rate risk scenario.If interest rates go up to 7%,the bondholder holding a bond with a 6% interest rate knows that he could do better.If he is forced to sell his bond on the secondary market before it matures,he will receive less than the face value.

Accepted Answer

A) True 
 B)False

Question 4

Corporations receive needed funds when they sell a new issuance of a security in the primary market.

Accepted Answer

A) True 
 B)False

Question 5

If you want to buy the stocks of largely capitalized companies (companies with millions,and even billions worth of assets),your broker will need to make the trade through the NYSE Euronext.

Accepted Answer

A) True 
 B)False

Question 6

Young investors place more importance on low risk investments,while elderly investors prefer significant growth in the value of their investments.

Accepted Answer

A) True 
 B)False

Question 7

Bondholders represent creditors of a firm.

Accepted Answer

A) True 
 B)False

Question 8

The Federal Trade Commission (FTC)regulates the security markets in the United States.

Accepted Answer

A) True 
 B)False

Question 9

Corporations receive the proceeds for the sale of their stock in:

Accepted Answer

A)   the primary market.
B)   the secondary market.
C)   both primary and secondary markets.
D)   venture capital markets.E) All of the above
F) None of the above

Question 10

Issuing new common stock usually expands ownership,giving all owners the right to vote for the firm's board of directors.

Accepted Answer

A) True 
 B)False

Question 11

Two kinds of equity financing are:

Accepted Answer

A)   common and preferred stock.
B)   convertible and superior stock.
C)   fixed and variable stock.
D)   common and superior stock.E) All of the above
F) A) and B)

Question 12

Cumulative preferred stockholders enjoy the first right to purchase any new shares of stock issued by the firm.

Accepted Answer

A) True 
 B)False

Question 13

When brokers talk about trading round lots,they are referring to 50 shares of stock.

Accepted Answer

A) True 
 B)False

Question 14

Buying stock on margin allows investors to increase the potential rate of return made on a stock investment.

Accepted Answer

A) True 
 B)False

Question 15

Which of these represents a special feature included with some bond issues?

Accepted Answer

A)   No repayment of par value
B)   No obligation to pay dividends
C)   No increase in the firm's debt level
D)   Convertibility of a debt security (bond) into an equity security (stock) E) All of the above
F) B) and C)

Question 16

Once a stock exchange agrees to list a company,the firm can be assured that it will always be listed by that exchange.

Accepted Answer

A) True 
 B)False

Question 17

One criticism of the Dow Jones Industrial Average suggests that it:

Accepted Answer

A)   magnifies the fluctuations in the stock market.
B)   does not indicate the cause of changes in stock prices.
C)   is too small (too few companies) to get a good statistical representation.
D)   is biased causing an overstatement of bond price increases and an understatement of stock price decreases.E) B) and C)
F) None of the above

Question 18

Using information not available to the public to unfairly benefit in the stock market represents:

Accepted Answer

A)   security fraud.
B)   an unethical,but a legal activity.
C)   blue-sky violations.
D)   insider trading.E) B) and D)
F) A) and C)

Question 19

A stock split immediately increases the value of an investor's holdings.

Accepted Answer

A) True 
 B)False

Question 20

Molly Manufacturing plans to issue $75 million of common stock.The firm will likely rely on the advice and assistance of a(n) :

Accepted Answer

A)   Federal Reserve bank.
B)   commercial bank.
C)   mutual fund.
D)   investment banker.E) B) and C)
F) None of the above

Exam 19: Using Securities Markets for Financing and Investing Opportunities

Securities markets provide private investors a place to buy and sell stocks,bonds,and mutual funds.

Correct Answer
verified

Cumulative preferred stockholders enjoy the first right to purchase any new shares of stock issued by the firm.

Correct Answer
verified

The Federal Trade Commission (FTC)regulates the security markets in the United States.

Correct Answer
verified

Molly Manufacturing plans to issue $75 million of common stock.The firm will likely rely on the advice and assistance of a(n) :

Correct Answer
verified

Corporations receive the proceeds for the sale of their stock in:

Correct Answer
verified

If you want to buy the stocks of largely capitalized companies (companies with millions,and even billions worth of assets),your broker will need to make the trade through the NYSE Euronext.

Correct Answer
verified

Bondholders represent creditors of a firm.

Correct Answer
verified

Using information not available to the public to unfairly benefit in the stock market represents:

Correct Answer
verified

Buying stock on margin allows investors to increase the potential rate of return made on a stock investment.

Correct Answer
verified

Correct Answer
verified

When brokers talk about trading round lots,they are referring to 50 shares of stock.

Correct Answer
verified

Once a stock exchange agrees to list a company,the firm can be assured that it will always be listed by that exchange.

Correct Answer
verified

One criticism of the Dow Jones Industrial Average suggests that it:

Correct Answer
verified

Corporations receive needed funds when they sell a new issuance of a security in the primary market.

Correct Answer
verified

A stock split immediately increases the value of an investor's holdings.

Correct Answer
verified

The higher the risk associated with a bond issue,the ________ the interest rate the organization must offer investors.

Correct Answer
verified

Young investors place more importance on low risk investments,while elderly investors prefer significant growth in the value of their investments.

Correct Answer
verified

Which of these represents a special feature included with some bond issues?

Correct Answer
verified

Issuing new common stock usually expands ownership,giving all owners the right to vote for the firm's board of directors.

Correct Answer
verified

Two kinds of equity financing are:

Correct Answer
verified

Exam 19: Using Securities Markets for Financing and Investing Opportunities

Securities markets provide private investors a place to buy and sell stocks,bonds,and mutual funds.

Correct AnswerverifiedShow Answer

Cumulative preferred stockholders enjoy the first right to purchase any new shares of stock issued by the firm.

Correct AnswerverifiedShow Answer

The Federal Trade Commission (FTC)regulates the security markets in the United States.

Correct AnswerverifiedShow Answer

Molly Manufacturing plans to issue $75 million of common stock.The firm will likely rely on the advice and assistance of a(n) :

Correct AnswerverifiedShow Answer

Corporations receive the proceeds for the sale of their stock in:

Correct AnswerverifiedShow Answer

If you want to buy the stocks of largely capitalized companies (companies with millions,and even billions worth of assets),your broker will need to make the trade through the NYSE Euronext.

Correct AnswerverifiedShow Answer

Bondholders represent creditors of a firm.

Correct AnswerverifiedShow Answer

Using information not available to the public to unfairly benefit in the stock market represents:

Correct AnswerverifiedShow Answer

Buying stock on margin allows investors to increase the potential rate of return made on a stock investment.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When brokers talk about trading round lots,they are referring to 50 shares of stock.

Correct AnswerverifiedShow Answer

Once a stock exchange agrees to list a company,the firm can be assured that it will always be listed by that exchange.

Correct AnswerverifiedShow Answer

One criticism of the Dow Jones Industrial Average suggests that it:

Correct AnswerverifiedShow Answer

Corporations receive needed funds when they sell a new issuance of a security in the primary market.

Correct AnswerverifiedShow Answer

A stock split immediately increases the value of an investor's holdings.

Correct AnswerverifiedShow Answer

The higher the risk associated with a bond issue,the ________ the interest rate the organization must offer investors.

Correct AnswerverifiedShow Answer

Young investors place more importance on low risk investments,while elderly investors prefer significant growth in the value of their investments.

Correct AnswerverifiedShow Answer

Which of these represents a special feature included with some bond issues?

Correct AnswerverifiedShow Answer

Issuing new common stock usually expands ownership,giving all owners the right to vote for the firm's board of directors.

Correct AnswerverifiedShow Answer

Two kinds of equity financing are:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

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verified

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Correct Answer
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