Question 1

Securities not listed on one of the exchanges trade in the over-the-counter market. In this exchange, dealers "make a market" by

Accepted Answer

A) buying stocks for inventory when investors want to sell. 
B) selling stocks from inventory when investors want to buy. 
C) doing both of the above. 
D) doing neither of the above. 
A) buying stocks for inventory when investors want to sell. 
B) selling stocks from inventory when investors want to buy. 
C) doing both of the above. 
D) doing neither of the above.

Question 2

(I)Preferred stockholders hold a claim on assets that has priority over the claims of common stockholders. (II)Bondholders hold a claim on assets that has priority over the claims of preferred stockholders.

Accepted Answer

A) (I)is true, (II)false. 
B) (I)is false, (II)true. 
C) Both are true. 
D) Both are false. 
A) (I)is true, (II)false. 
B) (I)is false, (II)true. 
C) Both are true. 
D) Both are false.

Question 3

The Enron financial scandal increased uncertainty about the quality of accounting information and as a result, increased required return on investment in stocks.

Accepted Answer

A) True 
 B)False

Question 4

Suppose the average industry PE ratio for auto parts retailers is 20. What is the current price of Auto Zone stock if the retailer's earnings per share is projected to be $1.85?

Accepted Answer

A) $21.85 
B) $37 
C) $10.81 
D) $9.25 
A) $21.85 
B) $37 
C) $10.81 
D) $9.25

Question 5

Why would a crisis in the subprime mortgage market lead to declining prices in the U.S. equity markets?

Accepted Answer

The answer of Why would a crisis in the subprime...

Question 6

Which of the following is not an advantage of Electronic Communications Networks (ECNs)?

Accepted Answer

A) All unfilled orders are available for review by ECN traders. 
B) Transactions costs are lower for ECN trades. 
C) Trades are made and confirmed faster. 
D) ECNs work well for thinly traded stocks. 
A) All unfilled orders are available for review by ECN traders. 
B) Transactions costs are lower for ECN trades. 
C) Trades are made and confirmed faster. 
D) ECNs work well for thinly traded stocks.

Question 7

A stock currently sells for $30 per share and pays $1.00 per year in dividends. What is an investor's valuation of this stock if he expects it to be selling for $37 in one year and requires a 12 percent return on equity investments?

Accepted Answer

A) $38 
B) $33.50 
C) $34.50 
D) $33.93 
A) $38 
B) $33.50 
C) $34.50 
D) $33.93

Question 8

The PE ratio approach to valuing stock is especially useful for valuing

Accepted Answer

A) publicly held corporations. 
B) firms that regularly pay dividends. 
C) both A and B of the above. 
D) neither A nor B of the above. 
A) publicly held corporations. 
B) firms that regularly pay dividends. 
C) both A and B of the above. 
D) neither A nor B of the above.

Securities not listed on one of the exchanges trade in the over-the-counter market. In this exchange, dealers "make a market" by

(I)Preferred stockholders hold a claim on assets that has priority over the claims of common stockholders. (II)Bondholders hold a claim on assets that has priority over the claims of preferred stockholders.

The Enron financial scandal increased uncertainty about the quality of accounting information and as a result, increased required return on investment in stocks.

Suppose the average industry PE ratio for auto parts retailers is 20. What is the current price of Auto Zone stock if the retailer's earnings per share is projected to be $1.85?

Why would a crisis in the subprime mortgage market lead to declining prices in the U.S. equity markets?

Which of the following is not an advantage of Electronic Communications Networks (ECNs)?

A stock currently sells for $30 per share and pays $1.00 per year in dividends. What is an investor's valuation of this stock if he expects it to be selling for $37 in one year and requires a 12 percent return on equity investments?

The PE ratio approach to valuing stock is especially useful for valuing

Why Study Financial Markets and Institutions

Overview of the Financial System

What Do Interest Rates Mean and What Is Their Role in Valuation

Why Do Interest Rates Change

How Do Risk and Term Structure Affect Interest Rates

Are Financial Markets Efficient

Why Do Financial Institutions Exist

Why Do Financial Crises Occur and Why Are They so Damaging to the Economy

Central Banks and the Federal Reserve System

Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

The Money Markets

The Bond Market

The Mortgage Markets

The Foreign Exchange Market

The International Financial System

Banking and the Management of Financial Institutions

Financial Regulation

Banking Industry: Structure and Competition

The Mutual Fund Industry

Insurance Companies and Pension Funds

Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

Risk Management in Financial Institutions

Hedging With Financial Derivatives

Savings Associations and Credit Unions

Finance Companies

Filters

Exam 13: The Stock Market

Securities not listed on one of the exchanges trade in the over-the-counter market. In this exchange, dealers "make a market" by

(I)Preferred stockholders hold a claim on assets that has priority over the claims of common stockholders. (II)Bondholders hold a claim on assets that has priority over the claims of preferred stockholders.

The Enron financial scandal increased uncertainty about the quality of accounting information and as a result, increased required return on investment in stocks.

Suppose the average industry PE ratio for auto parts retailers is 20. What is the current price of Auto Zone stock if the retailer's earnings per share is projected to be $1.85?

Why would a crisis in the subprime mortgage market lead to declining prices in the U.S. equity markets?

Which of the following is not an advantage of Electronic Communications Networks (ECNs)?

A stock currently sells for $30 per share and pays $1.00 per year in dividends. What is an investor's valuation of this stock if he expects it to be selling for $37 in one year and requires a 12 percent return on equity investments?

The PE ratio approach to valuing stock is especially useful for valuing

Why Study Financial Markets and Institutions

Overview of the Financial System

What Do Interest Rates Mean and What Is Their Role in Valuation

Why Do Interest Rates Change

How Do Risk and Term Structure Affect Interest Rates

Are Financial Markets Efficient

Why Do Financial Institutions Exist

Why Do Financial Crises Occur and Why Are They so Damaging to the Economy

Central Banks and the Federal Reserve System

Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

The Money Markets

The Bond Market

The Mortgage Markets

The Foreign Exchange Market

The International Financial System

Banking and the Management of Financial Institutions

Financial Regulation

Banking Industry: Structure and Competition

The Mutual Fund Industry

Insurance Companies and Pension Funds

Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

Risk Management in Financial Institutions

Hedging With Financial Derivatives

Savings Associations and Credit Unions

Finance Companies

Filters