Question 1

When you place a limit order,it means you are willing to buy or sell the stock at the best price available.

Accepted Answer

A) True 
 B)False

Question 2

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 3

___________ 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 C)
F) None of the above

Question 4

Government bonds can vary in denomination,but most corporate bonds are issued in ___________.

Accepted Answer

A)   Discounted denominations
B)   $1000 denominations
C)   $100 denominations
D)   $5,000 denominationsE) All of the above
F) None of the above

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Prior to declaring a 4-for-1 stock split,Carbello Enterprises' stock sold for $44 a share.Immediately after the stock split,the value of a share of Carbello's stock should be ________ per share.

Accepted Answer

A)   $11
B)   $44
C)   $48
D)   $176E) All of the above
F) A) and C)

Question 7

The largest one-day drop in the stock market occurred in 1987 - a 22% drop.

Accepted Answer

A) True 
 B)False

Question 8

Portland Power and Light recently issued bonds that offered no collateral except the reputation and established name of the Portland Power and Light Company.These represent ________ bonds.

Accepted Answer

A)   debenture
B)   secured
C)   trust
D)   conveyanceE) A) and B)
F) None of the above

Question 9

Roberto directed his broker to buy 75 shares of New Mexico Technologies at the best possible price available that day.These directions indicate that Roberto placed a ________ order with his broker.

Accepted Answer

A)   market
B)   limit
C)   margin
D)   splitE) A) and B)
F) A) and D)

Question 10

The traditional market barometer used to measure the direction of the stock market is the:

Accepted Answer

A)   Value Line Composite.
B)   Moody's Investment Index.
C)   Dow Jones Industrial Average.
D)   Fitch's Industrial Index.E) C) and D)
F) B) and C)

Question 11

A(n) ________ refers to the first public offering of a corporation's stock.

Accepted Answer

A)   primary market offer (PMO) 
B)   initial securities proposal (ISP) 
C)   initial public offering (IPO) 
D)   primary public sale (PPS) E) B) and D)
F) B) and C)

Question 12

An unsecured bond,backed only by the well-respected name of the organization,is called a _________ bond.

Accepted Answer

A)   mortgage
B)   leveraged
C)   debenture
D)   convertibleE) A) and D)
F) B) and C)

Question 13

U.S.investors have invested $12 trillion in mutual funds.

Accepted Answer

A) True 
 B)False

Question 14

The stock of well-known,high quality firms,such as Coca-Cola,General Electric,and Procter & Gamble,fit the characteristics of ________ stocks,because investors can almost always be assured a dividend and consistent stock price appreciation.

Accepted Answer

A)   growth
B)   blue chip
C)   income
D)   callableE) All of the above
F) A) and D)

Question 15

According to the Standard & Poor's Investor Services ratings,which of these ratings indicate a highly speculative bond?

Accepted Answer

A)   AA
B)   B
C)   C
D)   BBBE) C) and D)
F) B) and D)

Question 16

Diversification means buying several different types of investments with the funds you have available for investment.

Accepted Answer

A) True 
 B)False

Question 17

The market price of a share of common stock depends heavily on:

Accepted Answer

A)   the number of stocks traded on the New York Stock Exchange.
B)   the default rate on U.S.government bonds.
C)   the overall performance of the company.
D)   the relative value of the U.S.dollar compared to the euro.E) B) and C)
F) A) and D)

Question 18

The Dow Jones Industrial Average reflects the daily average price of all the stocks traded on the New York Stock Exchange.

Accepted Answer

A) True 
 B)False

Question 19

Wyoming Mining Corporation makes regular monetary deposits that will accumulate and provide for an orderly retirement of their bonds when they come due in 2015.Wyoming Mining appears to be utilizing a:

Accepted Answer

A)   call provision.
B)   sinking fund.
C)   compensating balance system.
D)   retirement escrow account.E) All of the above
F) A) and C)

Question 20

If an investor owns a bond that pays a higher rate of interest than other bonds of similar risk,the investor should be able to sell the bond on the secondary market for more than its face value.

Accepted Answer

A) True 
 B)False

Exam 19: Using Securities Markets for Financing and Investing Opportunities

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

Correct AnswerverifiedShow Answer

When you place a limit order,it means you are willing to buy or sell the stock at the best price available.

Correct AnswerverifiedShow Answer

The traditional market barometer used to measure the direction of the stock market is the:

Correct AnswerverifiedShow Answer

Diversification means buying several different types of investments with the funds you have available for investment.

Correct AnswerverifiedShow Answer

A(n) ________ refers to the first public offering of a corporation's stock.

Correct AnswerverifiedShow Answer

Prior to declaring a 4-for-1 stock split,Carbello Enterprises' stock sold for $44 a share.Immediately after the stock split,the value of a share of Carbello's stock should be ________ per share.

Correct AnswerverifiedShow Answer

U.S.investors have invested $12 trillion in mutual funds.

Correct AnswerverifiedShow Answer

Government bonds can vary in denomination,but most corporate bonds are issued in ___________.

Correct AnswerverifiedShow Answer

The largest one-day drop in the stock market occurred in 1987 - a 22% drop.

Correct AnswerverifiedShow Answer

Portland Power and Light recently issued bonds that offered no collateral except the reputation and established name of the Portland Power and Light Company.These represent ________ bonds.

Correct AnswerverifiedShow Answer

The market price of a share of common stock depends heavily on:

Correct AnswerverifiedShow Answer

If an investor owns a bond that pays a higher rate of interest than other bonds of similar risk,the investor should be able to sell the bond on the secondary market for more than its face value.

Correct AnswerverifiedShow Answer

The stock of well-known,high quality firms,such as Coca-Cola,General Electric,and Procter & Gamble,fit the characteristics of ________ stocks,because investors can almost always be assured a dividend and consistent stock price appreciation.

Correct AnswerverifiedShow Answer

The Dow Jones Industrial Average reflects the daily average price of all the stocks traded on the New York Stock Exchange.

Correct AnswerverifiedShow Answer

According to the Standard & Poor's Investor Services ratings,which of these ratings indicate a highly speculative bond?

Correct AnswerverifiedShow Answer

An unsecured bond,backed only by the well-respected name of the organization,is called a _________ bond.

Correct AnswerverifiedShow Answer

Wyoming Mining Corporation makes regular monetary deposits that will accumulate and provide for an orderly retirement of their bonds when they come due in 2015.Wyoming Mining appears to be utilizing a:

Correct AnswerverifiedShow Answer

Roberto directed his broker to buy 75 shares of New Mexico Technologies at the best possible price available that day.These directions indicate that Roberto placed a ________ order with his broker.

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

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

Correct AnswerverifiedShow Answer

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