Question 1

Stock certificates identify per share dividends, expressed as a percentage of par value.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Standard & Poor's currently rates Careful Corporation bonds as a D grade. This indicates that these bonds are

Accepted Answer

A)   of the highest quality with lowest default risk.
B)   moderately speculative.
C)   corporate bonds with variable interest rates.
D)   the lowest quality and the highest risk.E) A) and B)
F) A) and C)

Question 4

Changes in investor trust and confidence strongly influence stock market prices.

Accepted Answer

A) True 
 B)False

Question 5

The stock of companies that fail to meet a stock exchange's minimum requirements can be delisted.

Accepted Answer

A) True 
 B)False

Question 6

After many years as a privately held corporation, Greeley Industries decided to offer stock to the general public. Greeley 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) C) and D)
F) A) and D)

Question 7

Daily reporting of the Dow Jones Industrial Average serves to

Accepted Answer

A)   show the direction of the market over time.
B)   distort short-term fluctuations for the financial community.
C)   identify the beginning of a recession in the economy.
D)   disclose the average price of a share of stock on the major exchanges.E) A) and D)
F) A) and C)

Question 8

________ are the firm's after tax profits that are distributed to stockholders.

Accepted Answer

A)   Equity capital
B)   Interest payments
C)   Dividends
D)   Retained earningsE) B) and D)
F) B) and C)

Question 9

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) None of the above
F) All of the above

Question 10

The investor always pays a fee when purchasing a share of a mutual fund.

Accepted Answer

A) True 
 B)False

Question 11

A preferred stock's par value establishes the base used for calculating the preferred stockholders' dividend.

Accepted Answer

A) True 
 B)False

Question 12

A mutual fund's purpose is rapid investment growth, not to provide diversification for investors.

Accepted Answer

A) True 
 B)False

Question 13

________ means that the mutual fund company does not show a fee or commission for investing in the fund.

Accepted Answer

A)   Front load
B)   Back load
C)   Double load
D)   No loadE) All of the above
F) B) and D)

Question 14

Mutual funds offer small investors an opportunity to diversify their investments.

Accepted Answer

A) True 
 B)False

Question 15

New investors may want to consider ________ funds, which are mutual funds that invest in one particular kind of stock or a particular kind of bond, or even stocks that are representative of the entire market.

Accepted Answer

A)   international
B)   index
C)   global
D)   reliefE) A) and C)
F) B) and C)

Question 16

Buying stock on margin allows an investor to borrow funds from the brokerage company as part of the transaction. This ________ the potential return to the investor and ________ the risk.

Accepted Answer

A)   increases; increases
B)   increases; decreases
C)   decreases; increases
D)   decreases; decreasesE) C) and D)
F) B) and D)

Question 17

Although the interest rate is fixed when the bond is issued, the interest rate that one firm must pay compared to another may vary depending upon risk factors such as the reputation of the firm.

Accepted Answer

A) True 
 B)False

Question 18

Stock market circuit breakers stop stock trading for a short time when the stock market experiences a significant drop in stock values.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

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

Question 20

In the Adapting to Change box, Millennials, who distrusted and overlooked traditional financial advisors, started using robo-advisors when investing.

Accepted Answer

A) True 
 B)False

Exam 19: Using Securities Markets for Financing and Investing Opportunities

Mutual funds offer small investors an opportunity to diversify their investments.

Correct AnswerverifiedShow Answer

Stock market circuit breakers stop stock trading for a short time when the stock market experiences a significant drop in stock values.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Changes in investor trust and confidence strongly influence stock market prices.

Correct AnswerverifiedShow Answer

Stock certificates identify per share dividends, expressed as a percentage of par value.

Correct AnswerverifiedShow Answer

The investor always pays a fee when purchasing a share of a mutual fund.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

________ are the firm's after tax profits that are distributed to stockholders.

Correct AnswerverifiedShow Answer

The stock of companies that fail to meet a stock exchange's minimum requirements can be delisted.

Correct AnswerverifiedShow Answer

Standard & Poor's currently rates Careful Corporation bonds as a D grade. This indicates that these bonds are

Correct AnswerverifiedShow Answer

A mutual fund's purpose is rapid investment growth, not to provide diversification for investors.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Daily reporting of the Dow Jones Industrial Average serves to

Correct AnswerverifiedShow Answer

A preferred stock's par value establishes the base used for calculating the preferred stockholders' dividend.

Correct AnswerverifiedShow Answer

Buying stock on margin allows an investor to borrow funds from the brokerage company as part of the transaction. This ________ the potential return to the investor and ________ the risk.

Correct AnswerverifiedShow Answer

Although the interest rate is fixed when the bond is issued, the interest rate that one firm must pay compared to another may vary depending upon risk factors such as the reputation of the firm.

Correct AnswerverifiedShow Answer

New investors may want to consider ________ funds, which are mutual funds that invest in one particular kind of stock or a particular kind of bond, or even stocks that are representative of the entire market.

Correct AnswerverifiedShow Answer

In the Adapting to Change box, Millennials, who distrusted and overlooked traditional financial advisors, started using robo-advisors when investing.

Correct AnswerverifiedShow Answer

________ means that the mutual fund company does not show a fee or commission for investing in the fund.

Correct AnswerverifiedShow Answer

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Buying stock on margin allows an investor to borrow funds from the brokerage company as part of the transaction. This the potential return to the investor and the risk.

Correct Answer
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