Question 1

Online trading services target those investors who

Accepted Answer

A)  require the research and advice of a licensed stockbroker. 
B)  are interested in purchasing government bonds. 
C)  are willing to do their own research. 
D)  trade the securities of foreign firms. 
A)  require the research and advice of a licensed stockbroker. 
B)  are interested in purchasing government bonds. 
C)  are willing to do their own research. 
D)  trade the securities of foreign firms.

Question 2

Mutual funds offer small investors an opportunity to diversify their investments.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  selling common stock. 
B)  petitioning the government for a loan. 
C)  purchasing additional assets. 
D)  decreasing their accounts payable. 
A)  selling common stock. 
B)  petitioning the government for a loan. 
C)  purchasing additional assets. 
D)  decreasing their accounts payable.

Question 4

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

Accepted Answer

A)  Blue chip 
B)  Penny 
C)  Growth 
D)  Income 
A)  Blue chip 
B)  Penny 
C)  Growth 
D)  Income

Question 5

An investor who purchases stock in a company becomes a(n)

Accepted Answer

A)  creditor. 
B)  owner. 
C)  blue chip master. 
D)  speculator. 
A)  creditor. 
B)  owner. 
C)  blue chip master. 
D)  speculator.

Question 6

A bear is an investor that expects stock prices to rise.

Accepted Answer

A) True 
 B)False

Question 7

Orlando, a recent graduate of a community college, is about to make his first investment in the stock market. Which of the following would be a cautious way for Orlando to start investing?

Accepted Answer

A)  future contracts in oil 
B)  index funds 
C)  short-selling technology stocks 
D)  commodity market transactions in precious metals 
A)  future contracts in oil 
B)  index funds 
C)  short-selling technology stocks 
D)  commodity market transactions in precious metals

Question 8

By issuing bonds, a firm's debt level increases, which may adversely affect the firm's image in the financial community.

Accepted Answer

A) True 
 B)False

Question 9

As the chief financial officer (CFO), you identify that your firm needs to raise additional funds by selling new shares of stock. Which of the following refers to a specialist that assists corporations in the issue and sale of new securities?

Accepted Answer

A)  an investment banker 
B)  a commodities broker 
C)  an officer of the Securities and Exchange Commission (SE
C)  
D)  an institutional investor advisor 
A)  an investment banker 
B)  a commodities broker 
C)  an officer of the Securities and Exchange Commission (SE
C)  
D)  an institutional investor advisor

Question 10

A ________ certificate provides evidence of ownership in a specific corporation.

Accepted Answer

A)  stock 
B)  bond 
C)  debt 
D)  capital 
A)  stock 
B)  bond 
C)  debt 
D)  capital

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Natalie landed her first job after from college. The same year, she also started her first investment account. Having met with several brokers before choosing someone to work with, Natalie wanted to make certain that her investment choices would provide for long-term growth, yet satisfy her concern for diversification. The person who won her business prepared an asset allocation plan that would start her account by investing in several index funds. Her advisor has offered her a sound way to combine the concern for diversification since index funds are a sensible way for Natalie to start.

Accepted Answer

A) True 
 B)False

Question 13

Investment bankers are in the business of underwriting securities. They profit from purchasing the new stock offering of a corporation at a discount, and then selling those shares of stock to the public at the market price.

Accepted Answer

A) True 
 B)False

Question 14

A convertible bond allows the bondholder to exchange the bond for

Accepted Answer

A)  preferred stock. 
B)  common stock. 
C)  collateral. 
D)  debt holder privileges. 
A)  preferred stock. 
B)  common stock. 
C)  collateral. 
D)  debt holder privileges.

Question 15

When corporations elect to issue two or more shares of stock to existing stockholders for each share they currently own, they have initiated a(n)

Accepted Answer

A)  stock split. 
B)  dividend spread. 
C)  share dividend. 
D)  earnings split. 
A)  stock split. 
B)  dividend spread. 
C)  share dividend. 
D)  earnings split.

Question 16

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

Accepted Answer

A)  $103.25 
B)  $1,032.50 
C)  $10,325.00 
D)  $10.33 
A)  $103.25 
B)  $1,032.50 
C)  $10,325.00 
D)  $10.33

Question 17

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

Accepted Answer

A)  expect to be repaid at a future date. 
B)  can legally demand dividend payments if the corporation maintains profitability. 
C)  adversely affect the company's debt level. 
D)  can exercise a significant impact on company management and policies. 
A)  expect to be repaid at a future date. 
B)  can legally demand dividend payments if the corporation maintains profitability. 
C)  adversely affect the company's debt level. 
D)  can exercise a significant impact on company management and policies.

Question 18

A no-load mutual fund charges no commission fees to buy or sell its shares.

Accepted Answer

A) True 
 B)False

Question 19

The advantage of using an online broker is that these services usually provide you with a wealth of information and help you allocate your assets. Sometimes they even help you create an investment plan for life!

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  bankruptcy filing. 
B)  cash dividend. 
C)  margin call. 
D)  stock split. 
A)  bankruptcy filing. 
B)  cash dividend. 
C)  margin call. 
D)  stock split.

Exam 19: Using Securities Markets for Financing and Investing Opportunities

Online trading services target those investors who

Mutual funds offer small investors an opportunity to diversify their investments.

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

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

An investor who purchases stock in a company becomes a(n)

A bear is an investor that expects stock prices to rise.

Orlando, a recent graduate of a community college, is about to make his first investment in the stock market. Which of the following would be a cautious way for Orlando to start investing?

By issuing bonds, a firm's debt level increases, which may adversely affect the firm's image in the financial community.

As the chief financial officer (CFO), you identify that your firm needs to raise additional funds by selling new shares of stock. Which of the following refers to a specialist that assists corporations in the issue and sale of new securities?

A ________ certificate provides evidence of ownership in a specific corporation.

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

Investment bankers are in the business of underwriting securities. They profit from purchasing the new stock offering of a corporation at a discount, and then selling those shares of stock to the public at the market price.

A convertible bond allows the bondholder to exchange the bond for

When corporations elect to issue two or more shares of stock to existing stockholders for each share they currently own, they have initiated a(n)

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

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

A no-load mutual fund charges no commission fees to buy or sell its shares.

The advantage of using an online broker is that these services usually provide you with a wealth of information and help you allocate your assets. Sometimes they even help you create an investment plan for life!

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

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Money, Financial Institutions, and the Federal Reserve

Working Within the Legal Environment

Using Technology to Manage Information

Managing Risk

Managing Personal Finances

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