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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 171

Multiple Choice

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Which of the following trades corporate stocks not listed on the national securities exchanges?

A) Federal Investment Assurance Agency
B) American Stock Exchange
C) The over-the-counter market
D) Chicago Board of Trade

E) None of the above
F) A) and B)

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Question 172

Multiple Choice

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Bonds perceived as high risk typically pay ________ interest rates.

A) higher
B) lower
C) more volatile
D) less volatile

E) B) and D)
F) B) and C)

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Question 173

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The Dow Jones Industrial Average utilizes the prices of the same 30 companies' stocks each year to ensure consistency.

Similar to bond investments,preferred shares can be _________,meaning the firm may buy them back.

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

An investor earns a capital gain when they sell a stock for more than they paid for it.

In the Legal Briefcase box in Chapter 19,the securitization of subprime loans is explained as one of the causes of the economic recession of 2008-2010.

A bond sold with a sinking fund provision requires the firm to allow a stockholder to exchange his/her bond for a specified number of shares of common stock.

In 2008,the NYSE Euronext purchased AMEX,creating the world's largest exchange.

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

Corporations that issue preferred stock incur a legal obligation to pay dividends to those stockholders.

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

New investors may want to consider _______ funds,which are mutual funds that invest in one particular kind of stock or a particular kind of bond,or even stocks that are representative of the entire market.

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

When market interest rates increase,the selling price of existing bonds will:

Bond interest is usually paid in two times each year,even though the interest rate that is usually quoted is an annual rate.

Most businesses prefer to meet their long-term financial needs through:

________ stocks represent investments in emerging fields that have the potential to realize better than average increases in the stock's prices.

Which of the following organizations provides an assessment of the relative level of risk of a particular firm's bond issue?

Examples of institutional investors are pension funds,mutual funds,and insurance companies.