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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 51

True/False

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A sinking fund provision decreases the risk of repayment in the minds of the investors.

A) True
B) False

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Question 52

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"Black Tuesday" refers to the stock market crash that occurred in October 1987.

A) True
B) False

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Question 53

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Stock quotations are now available online.Which of the following pieces of information is not likely to be on the stock quotation?

When retained earnings are not enough to meet their long-term funding needs,businesses may be able to raise funds by:

Tyler is looking for an investment that will pay a little better than what he can get from a government bond.You suggest that he consider a new issue of debenture bonds by Very Vegetarian that pay 8.5% annually.You explain that Very Vegetarian has operated for a long time,and the debenture feature makes these bonds more secure than others.

Corporations that want to attract more investors by lowering the selling price of their common stock might consider declaring a:

A mutual fund's purpose is rapid investment growth not to provide diversification for investors.

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

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

The call provision set by a company on its bonds benefits the investor.

According to the Reaching Beyond Our Borders box in Chapter 19,purchasing ADRs is one way that U.S.investors participate in the global securities market.

Bonds sold at a ________,sell for less than face value.

When investment bankers underwrite an issue,they buy at a discounted price,the entire stock issue of a firm and then sell the stock,at full price,to private investors.

The number of U.S.companies that are listed on foreign stock exchanges is declining.

In an attempt to lower their investment risk,investors prefer to buy a company's bond rather than the stock of the same firm.

A penny stock generally sells for a low initial price,pays regular dividends and provides consistent growth in the stock's value.

Samad wants to supplement his current investments with a high risk,low priced security.Which of these best fits his strategy of high risk,low price and a potentially high rate of return?

Over the past 50 years,the average annual return on bonds has exceeded the return from stocks.

After many years as a privately held corporation,Connecticut Industries decided to offer stock to the general public.Connecticut may discover that stockholders:

A Bond's face value is the same as its: