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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 81

True/False

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If a company announces a stock split, the investor may receive two or more shares of the company stock, for every one share that he/she holds.

A) True
B) False

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Question 82

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A margin call requires an investor to repay money borrowed from the broker used to purchase the stock.

A) True
B) False

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Question 83

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As a new father, Dan plans to accumulate funds over the next 18 years to help pay for his son's college education. Security markets provide Dan with

Epic Electronics decides to pay off its bonds several years before the maturity date. Apparently, the bonds

The owner of a convertible bond can exchange the bond for a specified number of shares of common stock in the same corporation.

A share of preferred stock is currently selling for $160. It offers the investor a dividend rate of 7%, with a par value of $100. If the company is able to pay dividends, preferred stockholders would receive a dividend of $11.20 per share.

The new issue $1,000 face value bonds due in 2030 issued by Bathtub Brewing Company are seen by investors as less attractive than other bonds offered by other businesses at the same time. The coupon rate attached to these bonds will need to be ________ than other corporate bond issues in order to attract investors.

Stocks of corporations with earnings expected to increase faster than other stocks are called ________ stocks.

Program trading refers to computer trading software that automatically sells stocks when their price dips to a predetermined level.

Online trading services target those investors who

After operating for years as a privately held corporation, Iron Age Metalworks plans to publicly trade its stock. As a midsized firm, Iron Age wants to avoid excessive paperwork, and the fear of being delisted in the future. The ________ provides the best fit for Iron Age's plans.

Standard and Poor's and Fitch Ratings are well-known companies that rate bonds.

Bond prices in the newspaper or online are quoted as a percentage of their face value of $1,000. If the bond price is 103.25, this bond's value is equal to

The stocks of high-quality companies such as Coca-Cola and IBM are called blue chip stocks.

Preferred stockholders possess the first right to purchase any new stock the company issues.

The Securities and Exchange Commission does not intercede in any way in the process of an IPO. Doing so would disrupt the natural process of the capital markets.

The trading of previously issued securities from one investor to another takes place in the

Before the announcement of a three-for-one stock split, the selling price for a share of stock in Fossil Oil Refineries was $150 per share. Immediately after the stock split, the probable price per share is

An income stock offers investors a relatively high dividend yield on their investment.

Issuing bonds to obtain long-term funds legally compels a firm to pay regular ________ payments and repay the ________ at the maturity date.