Question 1

Online investors expect more expert advice than investors using traditional brokerage firms.

Accepted Answer

A) True 
 B)False

Question 2

What agency sets the margin rates for purchasing stock in the U.S.?

Accepted Answer

A)   high commissioners of the Securities and Exchange Commission
B)   board of governors of the Federal Reserve System
C)   Securities Division of the Treasury Department
D)   Federal Trade Commission on Exchange MarketsE) A) and C)
F) A) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

In the securities markets, capital gains take place when

Accepted Answer

A)   the value of the Dow Jones Industrial Average appreciates.
B)   a security sells for more than the original purchase price.
C)   additional investors buy stock in an existing corporation.
D)   stockholders profit from the firm's use of leverage.E) B) and D)
F) All of the above

Question 5

Bondholders can sell their bonds

Accepted Answer

A)   on the secondary market prior to the maturity date.
B)   early if the bonds were issued with a callable option.
C)   after the bonds are converted into common stock.
D)   after receiving the written permission of other stakeholders.E) All of the above
F) C) and D)

Question 6

A company's stock does not have to be listed on one of the major stock exchanges in order to trade. It can be traded on

Accepted Answer

A)   over-the-counter market.
B)   NYSE Euronext.
C)   NASDAQ.
D)   AMEX.E) C) and D)
F) A) and D)

Question 7

When comparing the investments of different mutual funds, little variation in the risk level exists.

Accepted Answer

A) True 
 B)False

Question 8

Corporations sell a new issuance of securities in the primary market.

Accepted Answer

A) True 
 B)False

Question 9

Private investors benefit from securities markets primarily by

Accepted Answer

A)   having a place to buy and sell stocks and bonds.
B)   obtaining the capital they need to finance their operations.
C)   securing memberships on various stock exchanges.
D)   participating in the primary markets of investment bankers.E) All of the above
F) C) and D)

Question 10

Creating a portfolio by buying several different types of investments to spread the risk of investing is called

Accepted Answer

A)   modulation.
B)   diversification.
C)   re-allocation.
D)   formula investing.E) B) and C)
F) All of the above

Question 11

Stock certificates represent evidence of ownership in an organization. A stock certificate contains which of the following?

Accepted Answer

A)   current market value of the stock
B)   the total number of shares issued by the company
C)   the type of stock the investor is buying
D)   the stock symbol and trading exchange of the companyE) A) and B)
F) A) and C)

Question 12

Bonds perceived as high risk typically pay ________ interest rates.

Accepted Answer

A)   higher
B)   lower
C)   more volatile
D)   less volatileE) A) and B)
F) None of the above

Question 13

Like many stock analysts, Layla believes that program trading greatly decreases the volatility of stock market prices.

Accepted Answer

A) True 
 B)False

Question 14

Penny is impressed with contemporary high-tech companies that have listed their stock on an electronic telecommunications network of securities dealers who trade the stock. She is referring to firms such as Microsoft, Google, and Apple. Penny ideally would like her company's stock listed on the

Accepted Answer

A)   AMEX.
B)   NASDAQ.
C)   OTC.
D)   NYSE Euronext.E) All of the above
F) B) and D)

Question 15

Having just returned from serving with the U.S. Marines in Afghanistan, Nick has managed to save most of his earnings. He has enrolled in the local community college and he is back living with his parents while he assimilates back into U.S. life. As his business major friend, he has come to you for advice. He would like to see his $40,000 savings grow, yet he knows that he will need it in about five years when he and his girlfriend are out of school and make plans to get married. He also worries that his car may break down and he will need to invest in another used car. Which of the following would you suggest for Nick?

Accepted Answer

A)   In order for Nick to see growth, he will need to place the entire $40,000 in one stock offering. You suggest a biotech stock that promises growth.
B)   Nick is still young. He needs to consider high-growth, higher-risk stocks and corporate bonds. He is young enough to recoup his investment if it should experience a loss.
C)   Nick should determine what types of companies he is passionate about. He should lead with his heart, but should be warned that some of those companies will produce better yields than others.
D)   Since liquidity is a concern, Nick would do best to diversify into four to eight different investments, and keep a reasonable amount in cash (a savings account)  for emergencies.E) B) and C)
F) A) and D)

Question 16

A bond's face value is the same as its

Accepted Answer

A)   risk rating.
B)   principal.
C)   coupon value.
D)   yield.E) None of the above
F) C) and D)

Question 17

An unsecured bond, backed only by the well-respected name of the organization, is called a ________ bond.

Accepted Answer

A)   mortgage
B)   leveraged
C)   debenture
D)   convertibleE) C) and D)
F) B) and C)

Question 18

________ have a set dollar goal the fund manager wants to manage. Once the fund has reached that goal, it does not accept new investors.

Accepted Answer

A)   No-load funds
B)   Closed-end funds
C)   Drop-off funds
D)   Zero-sum load fundsE) A) and C)
F) All of the above

Question 19

Which of the following federal government agencies has responsibility for regulating the various stock exchanges in the U.S.?

Accepted Answer

A)   SEC
B)   NASDAQ
C)   FCC
D)   ICCE) A) and B)
F) None of the above

Question 20

Firms are at a disadvantage when issuing bonds because the interest rate that they must pay to bondholders is not tax deductible.

Accepted Answer

A) True 
 B)False

Exam 19: Using Securities Markets for Financing and Investing Opportunities

A company's stock does not have to be listed on one of the major stock exchanges in order to trade. It can be traded on

Correct Answer
verified

Bondholders can sell their bonds

Correct Answer
verified

Corporations sell a new issuance of securities in the primary market.

Correct Answer
verified

When comparing the investments of different mutual funds, little variation in the risk level exists.

Correct Answer
verified

Stock certificates represent evidence of ownership in an organization. A stock certificate contains which of the following?

Correct Answer
verified

What agency sets the margin rates for purchasing stock in the U.S.?

Correct Answer
verified

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

Correct Answer
verified

An unsecured bond, backed only by the well-respected name of the organization, is called a ________ bond.

Correct Answer
verified

Bonds perceived as high risk typically pay ________ interest rates.

Correct Answer
verified

Penny is impressed with contemporary high-tech companies that have listed their stock on an electronic telecommunications network of securities dealers who trade the stock. She is referring to firms such as Microsoft, Google, and Apple. Penny ideally would like her company's stock listed on the

Correct Answer
verified

Online investors expect more expert advice than investors using traditional brokerage firms.

Correct Answer
verified

________ have a set dollar goal the fund manager wants to manage. Once the fund has reached that goal, it does not accept new investors.

Correct Answer
verified

Private investors benefit from securities markets primarily by

Correct Answer
verified

In the securities markets, capital gains take place when

Correct Answer
verified

Correct Answer
verified

Which of the following federal government agencies has responsibility for regulating the various stock exchanges in the U.S.?

Correct Answer
verified

Creating a portfolio by buying several different types of investments to spread the risk of investing is called

Correct Answer
verified

Firms are at a disadvantage when issuing bonds because the interest rate that they must pay to bondholders is not tax deductible.

Correct Answer
verified

A bond's face value is the same as its

Correct Answer
verified

Like many stock analysts, Layla believes that program trading greatly decreases the volatility of stock market prices.

Correct Answer
verified

Exam 19: Using Securities Markets for Financing and Investing Opportunities

A company's stock does not have to be listed on one of the major stock exchanges in order to trade. It can be traded on

Correct AnswerverifiedShow Answer

Bondholders can sell their bonds

Correct AnswerverifiedShow Answer

Corporations sell a new issuance of securities in the primary market.

Correct AnswerverifiedShow Answer

When comparing the investments of different mutual funds, little variation in the risk level exists.

Correct AnswerverifiedShow Answer

Stock certificates represent evidence of ownership in an organization. A stock certificate contains which of the following?

Correct AnswerverifiedShow Answer

What agency sets the margin rates for purchasing stock in the U.S.?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An unsecured bond, backed only by the well-respected name of the organization, is called a ________ bond.

Correct AnswerverifiedShow Answer

Bonds perceived as high risk typically pay ________ interest rates.

Correct AnswerverifiedShow Answer

Penny is impressed with contemporary high-tech companies that have listed their stock on an electronic telecommunications network of securities dealers who trade the stock. She is referring to firms such as Microsoft, Google, and Apple. Penny ideally would like her company's stock listed on the

Correct AnswerverifiedShow Answer

Online investors expect more expert advice than investors using traditional brokerage firms.

Correct AnswerverifiedShow Answer

________ have a set dollar goal the fund manager wants to manage. Once the fund has reached that goal, it does not accept new investors.

Correct AnswerverifiedShow Answer

Private investors benefit from securities markets primarily by

Correct AnswerverifiedShow Answer

In the securities markets, capital gains take place when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following federal government agencies has responsibility for regulating the various stock exchanges in the U.S.?

Correct AnswerverifiedShow Answer

Creating a portfolio by buying several different types of investments to spread the risk of investing is called

Correct AnswerverifiedShow Answer

Firms are at a disadvantage when issuing bonds because the interest rate that they must pay to bondholders is not tax deductible.

Correct AnswerverifiedShow Answer

A bond's face value is the same as its

Correct AnswerverifiedShow Answer

Like many stock analysts, Layla believes that program trading greatly decreases the volatility of stock market prices.

Correct AnswerverifiedShow Answer

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