Question 1

The Securities and Exchange Commission requires that all prospective investors receive a copy of a firm's prospectus prior to investing.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following situations would be considered insider trading?

Accepted Answer

A)  You open the morning paper and read that Sun Microsystems has a new CEO,who plans to bring in his own team.You decide to call your broker and buy shares of Sun Microsystems.
B)  Your Uncle Jerry works for Microsoft and sends you a news release put out by the company that talks about the acquisition of a Chinese company.You believe this will significantly boost Microsoft revenues so you buy 200 shares through an online service.
C)  You call your stockbroker and ask him to buy 500 shares of your company,Best Dressed Computers,Inc. ,because you just heard from the CEO's administrative assistant that the CEO just got the boot! You figure that this emotional news has got to help the stock price.
D)  Your stockbroker calls and recommends that you diversify your portfolio with a few shares of SLB [Schlaumberger] because SLB's request through the FTC and several international trade commissions to finalize the purchase of two oil companies was successful.You act on this information.E) B) and D)
F) B) and C)

Question 3

A penny stock generally sells for a low initial price,pays regular dividends and provides consistent growth in the stock's value.

Accepted Answer

A) True 
 B)False

Question 4

Ebony Enterprises decides to pay off its bonds several years before the maturity date.Apparently,the bonds ______________.

Accepted Answer

A)  contain an early dismissal clause
B)  have an early retirement option
C)  are callable
D)  have discount authorizationE) A) and D)
F) C) and D)

Question 5

Ashleigh is looking for an investment that will pay a little better than what she can get from a government bond.You suggest that she consider a new issue of debenture bonds by Very Vegetarian that pay 8.5% annually and mature in 2025.A debenture bond:

Accepted Answer

A)  will provide her with added security because it is backed by collateral.
B)  is legally not callable,so she will not have to worry about having to look for another investment any time soon.
C)  pays the holder interest only one time each year.
D)  is an unsecured corporate bond that pays a higher interest rate because the investor is taking more risk.E) B) and C)
F) None of the above

Question 6

Explain the major advantages and disadvantages of issuing stock as a source of long-term financing.

Accepted Answer

Raising long-term capital through equity...

Question 7

Stock quotations are now available online.Which of the following pieces of information is not likely to be on the stock quotation?

Accepted Answer

A)  52-week high price
B)  P/E ratio
C)  Dividend
D)  Profit for most recent quarterE) All of the above
F) None of the above

Question 8

The threat of terrorist attacks tends to depress stock market prices.

Accepted Answer

A) True 
 B)False

Question 9

Interest represents the payment to bondholders for the use of their money.

Accepted Answer

A) True 
 B)False

Question 10

Stocks of corporations with earnings expected to increase faster than other stocks are called ________ stocks.

Accepted Answer

A)  penny
B)  growth
C)  preferred
D)  blue skyE) A) and B)
F) A) and C)

Question 11

Security markets assist businesses in performing their ________ function.

Accepted Answer

A)  long-term investing
B)  long-term planning
C)  long-term financing
D)  concurrent controllingE) None of the above
F) A) and C)

Question 12

Preferred stockholders possess the first right to purchase any new stock the company issues.

Accepted Answer

A) True 
 B)False

Question 13

The NASDAQ is a floor-based exchange.

Accepted Answer

A) True 
 B)False

Question 14

The Dow Jones Industrial Average provides us with a sense of direction up or down)of the overall stock market.

Accepted Answer

A) True 
 B)False

Question 15

The trading of previously issued securities from one investor to another takes place in the:

Accepted Answer

A)  primary market.
B)  secondary market.
C)  initial offerings market.
D)  corporate trading market.E) B) and C)
F) A) and B)

Question 16

Issuing stock is considered equity financing.

Accepted Answer

A) True 
 B)False

Question 17

Bond classifications include,but are not limited to Corporate bonds,T-bills,Treasury bonds,Treasury notes,and Municipal bonds.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would be classified as an institutional investor?

Accepted Answer

A)  Pension funds
B)  Federal Reserve banks
C)  Stock exchanges
D)  Commodity brokersE) B) and C)
F) A) and D)

Question 19

The traditional market barometer used to measure the direction of the stock market is the:

Accepted Answer

A)  Value Line Composite.
B)  Moody's Investment Index.
C)  Dow Jones Industrial Average.
D)  Fitch's Industrial Index.E) None of the above
F) C) and D)

Question 20

Investing online is usually ________ than trading through a traditional stock brokerage firm.

Accepted Answer

A)  more expensive
B)  less expensive
C)  more volatile
D)  less profitableE) B) and D)
F) C) and D)

Exam 19: Using Securities Markets for Financing and Investing Opportunities

The NASDAQ is a floor-based exchange.

Correct AnswerverifiedShow Answer

The traditional market barometer used to measure the direction of the stock market is the:

Correct AnswerverifiedShow Answer

Security markets assist businesses in performing their ________ function.

Correct AnswerverifiedShow Answer

Stock quotations are now available online.Which of the following pieces of information is not likely to be on the stock quotation?

Correct AnswerverifiedShow Answer

Preferred stockholders possess the first right to purchase any new stock the company issues.

Correct AnswerverifiedShow Answer

Investing online is usually ________ than trading through a traditional stock brokerage firm.

Correct AnswerverifiedShow Answer

Ashleigh is looking for an investment that will pay a little better than what she can get from a government bond.You suggest that she consider a new issue of debenture bonds by Very Vegetarian that pay 8.5% annually and mature in 2025.A debenture bond:

Correct AnswerverifiedShow Answer

Issuing stock is considered equity financing.

Correct AnswerverifiedShow Answer

Which of the following situations would be considered insider trading?

Correct AnswerverifiedShow Answer

Ebony Enterprises decides to pay off its bonds several years before the maturity date.Apparently,the bonds ______________.

Correct AnswerverifiedShow Answer

The threat of terrorist attacks tends to depress stock market prices.

Correct AnswerverifiedShow Answer

The trading of previously issued securities from one investor to another takes place in the:

Correct AnswerverifiedShow Answer

Interest represents the payment to bondholders for the use of their money.

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission requires that all prospective investors receive a copy of a firm's prospectus prior to investing.

Correct AnswerverifiedShow Answer

Explain the major advantages and disadvantages of issuing stock as a source of long-term financing.

Correct AnswerverifiedRaising long-term capital through equity...View AnswerShow Answer

Stocks of corporations with earnings expected to increase faster than other stocks are called ________ stocks.

Correct AnswerverifiedShow Answer

Bond classifications include,but are not limited to Corporate bonds,T-bills,Treasury bonds,Treasury notes,and Municipal bonds.

Correct AnswerverifiedShow Answer

The Dow Jones Industrial Average provides us with a sense of direction up or down)of the overall stock market.

Correct AnswerverifiedShow Answer

A penny stock generally sells for a low initial price,pays regular dividends and provides consistent growth in the stock's value.

Correct AnswerverifiedShow Answer

Which of the following would be classified as an institutional investor?

Correct AnswerverifiedShow Answer

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Raising long-term capital through equity...
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