Question 1

As interest rates increase, bond prices fall.

Accepted Answer

A) True 
 B)False

Question 2

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) A) and D)
F) A) and C)

Question 3

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) C) and D)

Question 4

Cumulative preferred stock guarantees an investor that if preferred dividends are not paid, then all unpaid dividends will accumulate and be paid in full before any interest is paid to bondholders or common stockholders.

Accepted Answer

A) True 
 B)False

Question 5

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) B) and C)
F) None of the above

Question 6

Investing in common stock can give an individual the opportunity to participate in the success or failure of a corporation.

Accepted Answer

A) True 
 B)False

Question 7

If an individual investor places a limit order at $38 and the stock currently sells for $41 per share, the broker will buy the stock for the investor.

Accepted Answer

A) True 
 B)False

Question 8

Junk bonds are offered at higher interest rates than government bonds or corporate bonds with good ratings.

Accepted Answer

A) True 
 B)False

Question 9

A share of preferred stock currently sells for $120. It offers the investor a dividend rate of 8%, on a par value of $100. If the investor owns 500 shares, her total annual dividend will equal:

Accepted Answer

A)  $800
B)  $8.00
C)  $2,000
D)  $4,000E) A) and B)
F) None of the above

Question 10

Investors that purchase stock in a company become a(n) :

Accepted Answer

A)  creditor.
B)  owner.
C)  blue chip master.
D)  speculator.E) C) and D)
F) A) and D)

Question 11

To reduce market volatility, require that a key computer is turned off so that program trading must be done 'by hand' rather than automatically by computer.

Accepted Answer

A)  ultra restraints
B)  trading curbs
C)  market stops
D)  nutmeg haltsE) C) and D)
F) All of the above

Question 12

A sinking fund is a reserve account where the firm will periodically deposit funds in anticipation of repayment of a bond issue on the maturity date.

Accepted Answer

A) True 
 B)False

Question 13

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) A) and B)
F) B) and C)

Question 14

Purchasing stock from a foreign company whose home nation has an unstable currency or government is a relatively safe investment because you are not exchanging currency, you are exchanging stock.

Accepted Answer

A) True 
 B)False

Question 15

Abraham found a $1000 face value bond that belonged to his father. He checked the Wall Street Journal and found the bond was currently selling for $1220. This bond sells at a:

Accepted Answer

A)  discount.
B)  premium.
C)  price that is overvalued.
D)  primary market.E) A) and D)
F) B) and C)

Question 16

When thinking about purchasing foreign company stocks, U.S investors should proceed with caution if the foreign company's home nation has political unrest.

Accepted Answer

A) True 
 B)False

Question 17

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 18

The NYSE purchased Archipelago Holdings, Inc., in order to move from a floor-based exchange system to an electronic trading system.

Accepted Answer

A) True 
 B)False

Question 19

Dividends on preferred stock are:

Accepted Answer

A)  paid after common stockholders receive their dividends.
B)  guaranteed, except in the event of bankruptcy.
C)  normally fixed, if and when dividends are paid.
D)  always greater than dividends on common stock.E) None of the above
F) C) and D)

Question 20

On-line trading services target those investors who:

Accepted Answer

A)  require the research and advice of a licensed stockbroker.
B)  are interested in purchasing government bonds.
C)  are willing to do their own research.
D)  trade the securities of foreign firms.E) A) and D)
F) All of the above

Exam 19: Using Securities Markets for Financing and Investing Opportunities

Investing in common stock can give an individual the opportunity to participate in the success or failure of a corporation.

Correct AnswerverifiedShow Answer

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

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

Cumulative preferred stock guarantees an investor that if preferred dividends are not paid, then all unpaid dividends will accumulate and be paid in full before any interest is paid to bondholders or common stockholders.

Correct AnswerverifiedShow Answer

To reduce market volatility, require that a key computer is turned off so that program trading must be done 'by hand' rather than automatically by computer.

Correct AnswerverifiedShow Answer

A sinking fund is a reserve account where the firm will periodically deposit funds in anticipation of repayment of a bond issue on the maturity date.

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

If an individual investor places a limit order at $38 and the stock currently sells for $41 per share, the broker will buy the stock for the investor.

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

Junk bonds are offered at higher interest rates than government bonds or corporate bonds with good ratings.

Correct AnswerverifiedShow Answer

As interest rates increase, bond prices fall.

Correct AnswerverifiedShow Answer

On-line trading services target those investors who:

Correct AnswerverifiedShow Answer

Purchasing stock from a foreign company whose home nation has an unstable currency or government is a relatively safe investment because you are not exchanging currency, you are exchanging stock.

Correct AnswerverifiedShow Answer

Dividends on preferred stock are:

Correct AnswerverifiedShow Answer

The NYSE purchased Archipelago Holdings, Inc., in order to move from a floor-based exchange system to an electronic trading system.

Correct AnswerverifiedShow Answer

When thinking about purchasing foreign company stocks, U.S investors should proceed with caution if the foreign company's home nation has political unrest.

Correct AnswerverifiedShow Answer

Security markets assist businesses in performing their function.

Correct AnswerverifiedShow Answer

A share of preferred stock currently sells for $120. It offers the investor a dividend rate of 8%, on a par value of $100. If the investor owns 500 shares, her total annual dividend will equal:

Correct AnswerverifiedShow Answer

Abraham found a $1000 face value bond that belonged to his father. He checked the Wall Street Journal and found the bond was currently selling for $1220. This bond sells at a:

Correct AnswerverifiedShow Answer

Investors that purchase stock in a company become a(n) :

Correct AnswerverifiedShow Answer

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