Exam 19: Using Securities Markets for Financing and Investing Opportunities

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.

Many observers suggest that the stock market is dominated by the buying and selling activities of institutional investors.

Amy plans to buy 100 shares of common stock in Marshall Manufacturing. She willingly accepts the risk of this investment because she

Describe four different types of common stock that an investor may consider, depending upon the investor's strategy and risk tolerance.

One criticism of the Dow Jones Industrial Average suggests that it

As he was approaching retirement, Gabriel began a search for a low-risk investment. He should consider buying a secured bond of a major corporation.

When investing in mutual funds, the investor will buy shares of a fund that consists of stocks or bonds; the fund will hold shares of many companies.

U.S. government bonds are considered a secure investment because

Brittany read about PharmaONE and wants to buy 100 common shares at $40 per share. Unfortunately, she only has $3,000 available to invest. One risky strategy Brittany could consider is

Preemptive rights provide common stockholders the first right to purchase any new shares of common stock issued by the firm.

Which of the following situations would be considered insider trading?

Some analysts refer to ________ stocks as issues that sell for less than $2 (others say for less than $5).

The disadvantages of issuing stock to obtain long-term financing include

Norman 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?

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

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

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

In an effort to profit from stock market trading, Tony landed a job with the Newport Group. Tony intends to use his position to obtain privileged information about his new employer that would not be available to the public. While he realizes that he may be benefiting unfairly, he is not acting illegally because he is an employee.

Andrea invests $5,000 in five Epic Electronics bonds that mature in 10 years. Unexpectedly just the week after she invests, she has the opportunity to work abroad, which she has always wanted to do, but she needs cash. Which of the following most likely applies to Andrea?

In a secondary market sale of stock, the proceeds go to the investor selling the stock, not to the corporation.