Exam 19: Using Securities Markets for Financing and Investing Opportunities

Preferred stock may include callable and convertible provisions.

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

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

Preferred stockholders receive dividend payments before common stockholders are paid any dividends.

A mutual fund pools investors' money and then buys stocks and bonds in many companies in accordance with the purpose of the fund.

Buying a stock makes the investor an owner in the firm.

The Securities and Exchange Commission has accused Martha of benefiting unfairly from information secured from a corporate officer of Stewart Engineering. Because Martha used that information to profit in the stock market, she faces ________ charges.

Investors and corporations are on the opposite sides of the interest rate risk scenario. If interest rates go up to 7%, the bondholder holding a bond with a 6% interest rate knows that he could do better. If he is forced to sell his bond on the secondary market before it matures, he will receive less than the face value.

Before issuing stock or bonds, corporations must meet the disclosure requirements of the Federal Trade Commission (FTC).

Corporations sell a new issuance of securities in the primary market.

Issuing stock is considered equity financing.

Although you were not fortunate enough to get Tee Time Golf Resort stock as an IPO, you are still thinking about trying to add some to your portfolio. Last week when you mentioned it to your broker, he said that there are plenty of shares trading on ________, but he wanted to send you the company's financial disclosures provided in the ________ before you finalize your decision.

Which of the following securities are historically considered high quality and usually pay dividends?

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.

Normally, the higher the risk associated with a bond issue, the higher the interest rate the organization must offer potential investors.

A bond offering description reads: "6s of 2020." This means the bond pays 3% interest semi-annually and matures in 2020.

From an investor's viewpoint, bonds generally provide a safer investment option than does the stock of the same corporation.

High-risk, high-interest bonds are called

A company's stock does not have to be listed on one of the major stock exchanges in order to trade. It can be traded on

When stock prices decline steadily, investors refer to the market as a ________ market.