Exam 19: Using Securities Markets for Financing and Investing Opportunities

Insider trading involves the sale of stock to employees at discounted prices.

Bonds sold at a discount are sold for more than the bond's face value.

A stock split immediately increases the value of an investor's holdings.

Tee Time Golf Resort found that Jordan Spieth wants to put his name on golf course designs. However, for any course to be acceptable, it will cost at least $20 million to build. The plan is to purchase real estate for four new golf resorts. Proceeding with their venture, the owners have calculated that they will need approximately $100 million. But putting together an IPO is another matter. After meeting with their investment banker, they believe that investors will be willing to pay $22/share for the IPO. As the ________ for this issue, the investment bank requires 3% of the revenues generated by the sale. Tee Time will need to issue ________ shares in order to have the $100 million they need to proceed with their plan.

Abraham found a $1,000 face value bond that belonged to his father. He checked The Wall Street Journal and found the bond was currently selling for $1,220. This bond sells at a

Which of the following measures how quickly an investor has access to his/her invested funds, if they are needed?

The disadvantages of issuing stock to obtain long-term financing include

Corporations benefit from securities markets primarily by

Buying stock on margin allows investors to increase the potential rate of return made on a stock investment.

Securities markets help companies raise long-term debt and equity financing.

A recent publication referred to a series of bonds as "the 6s of 35." What does this mean?

Investors who trade securities buy securities they are interested in holding or sell securities to make a profit or cut losses by trading in the secondary market.

A corporate bond provides the owner with the right to sell the bond to other investors at any time during the life of the bond.

After owning a Maplewood Company bond for five years, Michelle exercised an option that allowed her to exchange her bond for 20 shares of the company stock. Michelle owned a

Exchange traded funds (ETFs) are like mutual funds because these funds permit the investor to buy shares of a collection of several stocks or shares of a collection of stocks and bonds, but, unlike mutual funds, they are traded during the day on the exchanges.

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.

Matthew recently invested in 15-year Bathtub Brewing Company bonds paying 8% interest annually, with a maturity date of 2035. The bonds are callable in 2030. If interest rates go down to 5.5% in the year 2030, the brewery is likely to

In the language of bonds, the terms "principal" and "face value" are synonymous.

Trading in newly issued securities takes place in the

Corporations receive the proceeds for the sale of their stock in