Question 1

If stock is issued in Pirate Recording,analysts predict that the company has potential for strong growth.The prospects for dividend payments to stockholders,at least in the beginning,are not good.Pirate Recording will need to retain its earnings in order to grow rapidly.The firm's stock would most likely be classified as an) :

Accepted Answer

A)  blue chip stock.
B)  income stock.
C)  growth stock.
D)  capital stock.E) None of the above
F) A) and D)

Question 2

Bonds perceived as high risk typically pay ________ interest rates.

Accepted Answer

A)  higher
B)  lower
C)  more volatile
D)  less volatileE) All of the above
F) B) and C)

Question 3

If paid,dividends come from any profits remaining after the firm has paid taxes.The company cannot deduct dividends as an expense of doing business.

Accepted Answer

A) True 
 B)False

Question 4

The new potato-bar restaurant chain,Hottie Potatee wants to raise an undisclosed amount of funds in order to expand the company-owned potato bar stores,internationally.This move will require the CFO Chief Financial Officer) to:

Accepted Answer

A)  Provide the FTC Fair Trade Commission) documentation of where and when they plan to develop stores in other countries.
B)  Increase his profits.He will take the average U.S.store profits and multiply it by the number of stores he wants to open abroad.
C)  Do nothing different than maintaining the funding balance of his business.
D)  File full disclosure financial statements and seek the approval of the Securities and Exchange Commission.E) B) and C)
F) A) and C)

Question 5

Many stock analysts believe that program trading decreases the volatility of stock market prices.

Accepted Answer

A) True 
 B)False

Question 6

A round lot refers to the purchase of 100 shares of stock in the same company in a single transaction.

Accepted Answer

A) True 
 B)False

Question 7

When an investor purchases a security,the investor does so with the expectation of:

Accepted Answer

A)  maintaining his or her capital position.
B)  minimizing risk.
C)  making a profit.
D)  providing commissions.E) None of the above
F) All of the above

Question 8

By buying a ________ bond,investors will have an option to exchange their bond for shares of common stock in the company at a future date.

Accepted Answer

A)  discount
B)  contingent
C)  convertible
D)  preferredE) B) and D)
F) C) and D)

Question 9

Yolanda has an ownership interest in many different companies,yet she owns the shares of stock of just one organization.Yolanda undoubtedly owns shares in an) :

Accepted Answer

A)  investment trust.
B)  security account.
C)  options association.
D)  mutual fund.E) All of the above
F) C) and D)

Question 10

Securities markets represent the financial marketplaces for stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following accurately describes an advantage of selling bonds to raise long-term capital?

Accepted Answer

A)  Interest is a legal obligation.
B)  Face value must be repaid.
C)  Bondholders have voting rights.
D)  Interest is a tax-deductible expense.E) A) and B)
F) A) and D)

Question 12

________ involves) computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.

Accepted Answer

A)  Software action
B)  Program trading
C)  Curbs
D)  Circuit-breakersE) None of the above
F) B) and C)

Question 13

When an investor places a buy order with a stockbroker,the broker contacts an) __________ to complete the transaction.

Accepted Answer

A)  certified underwriter
B)  investment banker
C)  stock exchange member or dealer where the stock is traded
D)  trading officer of the Securities Exchange CommissionE) C) and D)
F) B) and D)

Question 14

The interest rate paid to bondholders is sometimes called the coupon rate.

Accepted Answer

A) True 
 B)False

Question 15

By issuing bonds,a firm's debt level increases which may adversely affect the firm's image in the financial community.

Accepted Answer

A) True 
 B)False

Question 16

Sam Schiester,a stockbroker at Schemes Financial Services Company called you the other day asking if you would like to purchase an IPO."The hot new company,Hottie Potatee is going public,and I thought you might want to get in on it," he exclaimed.If you agree to buy shares of this company,this trade will occur on the secondary market.

Accepted Answer

A) True 
 B)False

Question 17

If a stock's closing price for the day is 32.47,the stock's price in U.S.dollars would be:

Accepted Answer

A)  $32 plus a $.47 commission.
B)  $32.47.
C)  in between a low of $32 and a high of $47.
D)  $3,247.E) B) and D)
F) None of the above

Question 18

Investment bankers provide ________ services by purchasing the entire new security issue from a corporation seeking to raise capital,and selling it to interested investors.

Accepted Answer

A)  underwriting
B)  investing
C)  leveraging
D)  discountingE) None of the above
F) All of the above

Question 19

From an investor's point of view,corporate bonds offer less risk than government bonds.

Accepted Answer

A) True 
 B)False

Question 20

When an investor sells a security for more than the purchase price,the investor earns an) :

Accepted Answer

A)  dividend payment.
B)  appreciated interest receipt.
C)  corporate benefit.
D)  capital gain.E) B) and C)
F) A) and D)

Exam 19: Using Securities Markets for Financing and Investing Opportunities

The interest rate paid to bondholders is sometimes called the coupon rate.

Correct Answer
verified

Correct Answer
verified

From an investor's point of view,corporate bonds offer less risk than government bonds.

Correct Answer
verified

When an investor places a buy order with a stockbroker,the broker contacts an) __________ to complete the transaction.

Correct Answer
verified

Many stock analysts believe that program trading decreases the volatility of stock market prices.

Correct Answer
verified

A round lot refers to the purchase of 100 shares of stock in the same company in a single transaction.

Correct Answer
verified

By issuing bonds,a firm's debt level increases which may adversely affect the firm's image in the financial community.

Correct Answer
verified

If a stock's closing price for the day is 32.47,the stock's price in U.S.dollars would be:

Correct Answer
verified

When an investor purchases a security,the investor does so with the expectation of:

Correct Answer
verified

Investment bankers provide ________ services by purchasing the entire new security issue from a corporation seeking to raise capital,and selling it to interested investors.

Correct Answer
verified

If paid,dividends come from any profits remaining after the firm has paid taxes.The company cannot deduct dividends as an expense of doing business.

Correct Answer
verified

________ involves) computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.

Correct Answer
verified

Bonds perceived as high risk typically pay ________ interest rates.

Correct Answer
verified

Securities markets represent the financial marketplaces for stocks and bonds.

Correct Answer
verified

By buying a ________ bond,investors will have an option to exchange their bond for shares of common stock in the company at a future date.

Correct Answer
verified

Correct Answer
verified

Which of the following accurately describes an advantage of selling bonds to raise long-term capital?

Correct Answer
verified

When an investor sells a security for more than the purchase price,the investor earns an) :

Correct Answer
verified

The new potato-bar restaurant chain,Hottie Potatee wants to raise an undisclosed amount of funds in order to expand the company-owned potato bar stores,internationally.This move will require the CFO Chief Financial Officer) to:

Correct Answer
verified

Yolanda has an ownership interest in many different companies,yet she owns the shares of stock of just one organization.Yolanda undoubtedly owns shares in an) :

Correct Answer
verified

Exam 19: Using Securities Markets for Financing and Investing Opportunities

The interest rate paid to bondholders is sometimes called the coupon rate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

From an investor's point of view,corporate bonds offer less risk than government bonds.

Correct AnswerverifiedShow Answer

When an investor places a buy order with a stockbroker,the broker contacts an) __________ to complete the transaction.

Correct AnswerverifiedShow Answer

Many stock analysts believe that program trading decreases the volatility of stock market prices.

Correct AnswerverifiedShow Answer

A round lot refers to the purchase of 100 shares of stock in the same company in a single transaction.

Correct AnswerverifiedShow Answer

By issuing bonds,a firm's debt level increases which may adversely affect the firm's image in the financial community.

Correct AnswerverifiedShow Answer

If a stock's closing price for the day is 32.47,the stock's price in U.S.dollars would be:

Correct AnswerverifiedShow Answer

When an investor purchases a security,the investor does so with the expectation of:

Correct AnswerverifiedShow Answer

Investment bankers provide ________ services by purchasing the entire new security issue from a corporation seeking to raise capital,and selling it to interested investors.

Correct AnswerverifiedShow Answer

If paid,dividends come from any profits remaining after the firm has paid taxes.The company cannot deduct dividends as an expense of doing business.

Correct AnswerverifiedShow Answer

________ involves) computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.

Correct AnswerverifiedShow Answer

Bonds perceived as high risk typically pay ________ interest rates.

Correct AnswerverifiedShow Answer

Securities markets represent the financial marketplaces for stocks and bonds.

Correct AnswerverifiedShow Answer

By buying a ________ bond,investors will have an option to exchange their bond for shares of common stock in the company at a future date.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following accurately describes an advantage of selling bonds to raise long-term capital?

Correct AnswerverifiedShow Answer

When an investor sells a security for more than the purchase price,the investor earns an) :

Correct AnswerverifiedShow Answer

The new potato-bar restaurant chain,Hottie Potatee wants to raise an undisclosed amount of funds in order to expand the company-owned potato bar stores,internationally.This move will require the CFO Chief Financial Officer) to:

Correct AnswerverifiedShow Answer

Yolanda has an ownership interest in many different companies,yet she owns the shares of stock of just one organization.Yolanda undoubtedly owns shares in an) :

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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