Question 1

After many years as a privately held corporation,Connecticut Industries decided to offer stock to the general public.Connecticut may discover that stockholders:

Accepted Answer

A)   expect to be repaid at a future date.
B)   can legally demand dividend payments if the corporation maintains profitability.
C)   adversely affect the company's debt level.
D)   can exercise a significant impact on company management and policies.E) B) and C)
F) A) and D)

Question 2

Trading curbs motivate traders to utilize their computerized programs to reduce market volatility.

Accepted Answer

A) True 
 B)False

Question 3

Your privately held firm needs additional funding for a planned expansion.Having never issued stock to the public,your firm is well advised to seek the assistance of an investment banker prior to an initial public offering of stock.

Accepted Answer

A) True 
 B)False

Question 4

If you are willing to hold on to your growth stock long enough,at least five years or more,you will realize capital gains.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following describes a benefit enjoyed by investors in mutual funds?

Accepted Answer

A)   Guaranteed dividend payments are received annually.
B)   Investment risk is eliminated.
C)   Investors buy an ownership interest in many different companies.
D)   Investors exercise managerial authority in many different companies.E) B) and C)
F) A) and C)

Question 6

Samad wants to supplement his current investments with a high risk,low priced security.Which of these best fits his strategy of high risk,low price and a potentially high rate of return?

Accepted Answer

A)   Time deposits
B)   Penny stocks
C)   Blue chip stocks
D)   Split stocksE) A) and D)
F) C) and D)

Question 7

U.S.government bonds are considered safe investments.Therefore such government bonds usually have a lower interest rate than corporate bonds.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Which of the following securities are historically considered high quality and usually pay dividends?

Accepted Answer

A)   Dollar stocks
B)   Growth stocks
C)   Preferred stocks
D)   Blue chip stocksE) A) and D)
F) B) and D)

Question 10

Which of the following securities guarantees preferred stockholders payment of missed dividends before any dividends are paid to common stockholders?

Accepted Answer

A)   Call provision
B)   Cumulative preferred
C)   Participating preferred
D)   Convertible preferredE) C) and D)
F) None of the above

Question 11

Tyrone owns shares of ________ stock in New Jersey Power.His stock certificate states that any missed dividends will be paid prior to any future common stock dividend payments.

Accepted Answer

A)   classified common
B)   preemptive common
C)   convertible preferred
D)   cumulative preferredE) A) and B)
F) All of the above

Question 12

Which of the following statements best describes the current legal interpretation of insider trading?

Accepted Answer

A)   Is only possible when you are a board member or a chief officer of a company.
B)   Can be any employee and relatives or friends of the employee.
C)   Would involve members of the SEC (Securities and Exchange Commission) and the investment banker who handles most of a firm's transactions.
D)   Anyone who has securities information about a particular firm that is not known by the general public.E) A) and D)
F) C) and D)

Question 13

Dividends are paid out of a corporation's:

Accepted Answer

A)   Profit,before taxes.
B)   Profit,after taxes.
C)   Sales revenue.
D)   Capital contributed by bondholders.E) A) and D)
F) A) and B)

Question 14

Stocks represent shares of ownership in a company.

Accepted Answer

A) True 
 B)False

Question 15

The U.S.government just announced an increase in the interest rate paid on U.S.government bonds.This will likely cause a decrease in the interest rates paid on corporate bonds.

Accepted Answer

A) True 
 B)False

Question 16

Maggie owns 10% or 50,000 common shares of a small biotech company.Although she has enjoyed a lot of control,Maggie realizes that in order for the firm to acquire the funds to grow in a recessionary economy,it will need to issue more stock.Unless she and others exercise preemptive rights,

Accepted Answer

A)   the company will surely begin to pay dividends.
B)   the new issue will dilute her ownership.
C)   the new issue will decrease the market price of the stock.
D)   The new issue will be traded on the secondary market.E) All of the above
F) None of the above

Question 17

Issuing ________ increases a firm's debt and may adversely affect the financial community's perception of the firm.

Accepted Answer

A)   common stock
B)   bonds
C)   preferred stock
D)   retained earningsE) A) and B)
F) B) and C)

Question 18

Before the announcement of a three-for-one stock split,the selling price for a share of stock in Olympia Oil Refineries was $150 per share.Immediately after the stock split,the probable price per share is:

Accepted Answer

A)   $450.
B)   $50.
C)   $350.
D)   $150.E) B) and C)
F) A) and C)

Question 19

While common stockholders of corporations have voting rights,preferred stockholders generally do not.

Accepted Answer

A) True 
 B)False

Question 20

If you buy 100 shares of IBM for $120/share,and the margin on your account is 50%,the broker will float you an interest free loan of $6,000,until the price of IBM sufficiently rises to the point where you are willing to sell.You pay the broker back its $6,000,and you enjoy the capital gain.

Accepted Answer

A) True 
 B)False

Exam 19: Using Securities Markets for Financing and Investing Opportunities

Issuing ________ increases a firm's debt and may adversely affect the financial community's perception of the firm.

Correct AnswerverifiedShow Answer

While common stockholders of corporations have voting rights,preferred stockholders generally do not.

Correct AnswerverifiedShow Answer

Stocks represent shares of ownership in a company.

Correct AnswerverifiedShow Answer

Maggie owns 10% or 50,000 common shares of a small biotech company.Although she has enjoyed a lot of control,Maggie realizes that in order for the firm to acquire the funds to grow in a recessionary economy,it will need to issue more stock.Unless she and others exercise preemptive rights,

Correct AnswerverifiedShow Answer

Before the announcement of a three-for-one stock split,the selling price for a share of stock in Olympia Oil Refineries was $150 per share.Immediately after the stock split,the probable price per share is:

Correct AnswerverifiedShow Answer

If you buy 100 shares of IBM for $120/share,and the margin on your account is 50%,the broker will float you an interest free loan of $6,000,until the price of IBM sufficiently rises to the point where you are willing to sell.You pay the broker back its $6,000,and you enjoy the capital gain.

Correct AnswerverifiedShow Answer

Which of the following describes a benefit enjoyed by investors in mutual funds?

Correct AnswerverifiedShow Answer

Which of the following securities are historically considered high quality and usually pay dividends?

Correct AnswerverifiedShow Answer

The U.S.government just announced an increase in the interest rate paid on U.S.government bonds.This will likely cause a decrease in the interest rates paid on corporate bonds.

Correct AnswerverifiedShow Answer

Which of the following securities guarantees preferred stockholders payment of missed dividends before any dividends are paid to common stockholders?

Correct AnswerverifiedShow Answer

Tyrone owns shares of ________ stock in New Jersey Power.His stock certificate states that any missed dividends will be paid prior to any future common stock dividend payments.

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

Trading curbs motivate traders to utilize their computerized programs to reduce market volatility.

Correct AnswerverifiedShow Answer

Your privately held firm needs additional funding for a planned expansion.Having never issued stock to the public,your firm is well advised to seek the assistance of an investment banker prior to an initial public offering of stock.

Correct AnswerverifiedShow Answer

After many years as a privately held corporation,Connecticut Industries decided to offer stock to the general public.Connecticut may discover that stockholders:

Correct AnswerverifiedShow Answer

If you are willing to hold on to your growth stock long enough,at least five years or more,you will realize capital gains.

Correct AnswerverifiedShow Answer

Dividends are paid out of a corporation's:

Correct AnswerverifiedShow Answer

U.S.government bonds are considered safe investments.Therefore such government bonds usually have a lower interest rate than corporate bonds.

Correct AnswerverifiedShow Answer

Which of the following statements best describes the current legal interpretation of insider trading?

Correct AnswerverifiedShow Answer

Samad wants to supplement his current investments with a high risk,low priced security.Which of these best fits his strategy of high risk,low price and a potentially high rate of return?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified