Question 1

A round lot refers to the purchase of 100 shares of stock in the same company in a single transaction.

Accepted Answer

A) True 
 B)False  True

Question 2

When an investor purchases a security, the investor does so with the expectation of:

Accepted Answer

A)  maintaining his or her capital position. 
B)  minimizing risk. 
C)  making a profit. 
D)  providing commissions. 
A)  maintaining his or her capital position. 
B)  minimizing risk. 
C)  making a profit. 
D)  providing commissions. C

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

If a stock's closing price for the day is 32.47, the stock's price in U.S. dollars would be:

Accepted Answer

A)  $32 plus a $.47 commission. 
B)  $32.47. 
C)  in between a low of $32 and a high of $47. 
D)  $3,247. 
A)  $32 plus a $.47 commission. 
B)  $32.47. 
C)  in between a low of $32 and a high of $47. 
D)  $3,247.

Question 5

The advantage of using an online broker is that these services usually provide you with a wealth of information and help you allocate your assets. Sometimes they even help you create an investment plan for life!

Accepted Answer

A) True 
 B)False

Question 6

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 7

Buying on margin means you are borrowing part of the value of the stock purchase from the brokerage firm.

Accepted Answer

A) True 
 B)False

Question 8

A bond's face value is the same as its:

Accepted Answer

A)  risk rating. 
B)  principal. 
C)  coupon value. 
D)  yield. 
A)  risk rating. 
B)  principal. 
C)  coupon value. 
D)  yield.

Question 9

Ellie owns stock in Rotary Technologies. Her stock provides a priority claim on dividend payments and on the firm's assets in the event of liquidation. However, her ________ stock ownership does not offer her voting rights.

Accepted Answer

A)  common 
B)  preferred 
C)  superior 
D)  callable 
A)  common 
B)  preferred 
C)  superior 
D)  callable

Question 10

For investors who desire the least possible risk, a share of stock in an established corporation provides the safest investment.

Accepted Answer

A) True 
 B)False

Question 11

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 brokers 
A)  Pension funds 
B)  Federal Reserve banks 
C)  Stock exchanges 
D)  Commodity brokers

Question 12

Lamont bought a share of stock in the ABC Corporation for $50. When he sold the stock later that year, he received $70. The par value of the stock is $5. Lamont's capital gain is $25.

Accepted Answer

A) True 
 B)False

Question 13

________ involve(s) computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.

Accepted Answer

A)  Software action 
B)  Program trading 
C)  Curbs 
D)  Circuit breakers 
A)  Software action 
B)  Program trading 
C)  Curbs 
D)  Circuit breakers

Question 14

Debenture bonds represent bonds that are not secured by collateral.

Accepted Answer

A) True 
 B)False

Question 15

By issuing bonds, a firm's debt level increases, which may adversely affect the firm's image in the financial community.

Accepted Answer

A) True 
 B)False

Question 16

When Tong Su purchased 500 shares of preferred stock in the Vibrates Corporation, his certificate indicated the stock had a par value of $50 per share. This means that Tong Su:

Accepted Answer

A)  will never get less than $50 per share when selling his stock. 
B)  has shares that are currently worth $50 per share. 
C)  may receive dividends based on this value per share. 
D)  must receive a $5 dividend each and every year. 
A)  will never get less than $50 per share when selling his stock. 
B)  has shares that are currently worth $50 per share. 
C)  may receive dividends based on this value per share. 
D)  must receive a $5 dividend each and every year.

Question 17

Many observers suggest that the stock market is dominated by the buying and selling activities of institutional investors.

Accepted Answer

A) True 
 B)False

Question 18

Lupe's stockbroker called to inform Lupe of a margin call that requires that she pay $1,000. This indicates that the value of Lupe's stock has:

Accepted Answer

A)  just split. 
B)  decreased. 
C)  increased. 
D)  changed causing the Federal Reserve to increase the margin rate. 
A)  just split. 
B)  decreased. 
C)  increased. 
D)  changed causing the Federal Reserve to increase the margin rate.

Question 19

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 company 
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 company

Question 20

Which of the following represents a disadvantage of issuing bonds?

Accepted Answer

A)  Bonds are permanent debt on the firm's balance sheet. 
B)  Dividends are legally required. 
C)  Bonds increase the firm's debt. 
D)  Bondholders receive voting rights. 
A)  Bonds are permanent debt on the firm's balance sheet. 
B)  Dividends are legally required. 
C)  Bonds increase the firm's debt. 
D)  Bondholders receive voting rights.

Exam 19: Using Securities Markets for Financing and Investing Opportunities

A round lot refers to the purchase of 100 shares of stock in the same company in a single transaction.

When an investor purchases a security, the investor does so with the expectation of:

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

If a stock's closing price for the day is 32.47, the stock's price in U.S. dollars would be:

The advantage of using an online broker is that these services usually provide you with a wealth of information and help you allocate your assets. Sometimes they even help you create an investment plan for life!

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

Buying on margin means you are borrowing part of the value of the stock purchase from the brokerage firm.

A bond's face value is the same as its:

Ellie owns stock in Rotary Technologies. Her stock provides a priority claim on dividend payments and on the firm's assets in the event of liquidation. However, her ________ stock ownership does not offer her voting rights.

For investors who desire the least possible risk, a share of stock in an established corporation provides the safest investment.

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

Lamont bought a share of stock in the ABC Corporation for $50. When he sold the stock later that year, he received $70. The par value of the stock is $5. Lamont's capital gain is $25.

________ involve(s) computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.

Debenture bonds represent bonds that are not secured by collateral.

By issuing bonds, a firm's debt level increases, which may adversely affect the firm's image in the financial community.

When Tong Su purchased 500 shares of preferred stock in the Vibrates Corporation, his certificate indicated the stock had a par value of $50 per share. This means that Tong Su:

Many observers suggest that the stock market is dominated by the buying and selling activities of institutional investors.

Lupe's stockbroker called to inform Lupe of a margin call that requires that she pay $1,000. This indicates that the value of Lupe's stock has:

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

Which of the following represents a disadvantage of issuing bonds?

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Union and Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Money, Financial Institutions, and the Federal Reserve

Managing the Marketing Mix: Product, Price, Place and Promotion

Extension: Working Within the Legal Environment

Extension: Using Technology to Manage Information

Extension: Managing Risk

Extension: Managing Personal Finances

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