Exam 16: Managing Finances

Common stock is bought by average persons for the sake of making money with no voting privileges.

Which stock exchange has the highest volume of shares traded?

What is the formula for measuring a firm's working capital?

The stocks of approximately 3,800 companies,both emerging and well known,are traded by NASDAQ.

When an investment bank engages in underwriting,that investment bank is taking on risk in the process of launching new securities.

A corporate raider is an investor that helps many firms grow rapidly by providing venture capital.

Short Case Scenario 16-1 Jessica is looking forward to a family reunion at the beach. She is the first in her family to have graduated from college. She started her studies at the local community college and transferred to a prestigious private college several hours from her family's home. Jessica's major in college was business administration with a concentration in finance. As she approaches the beach house where her family will be staying, Jessica is glad that her days of being quizzed and tested are over. She is looking forward to an opportunity to relax and to put her brain on "pause." However, Jessica's family has other plans for her. Almost before she emerges from her car, the questions begin. Jessica's great-aunt Irene is hoping for a little investment advice. Irene explains, "One of my CDs has recently matured and I'm hoping to roll it into an investment where I might make a little more interest. Your cousin Eddie has suggested that I invest in bonds, but I'm not sure what to think. You know, dear, Eddie's never been very bright and I'd be foolish to take his advice without a little more information. -Jessica studies market indexes.What do market indexes reveal?

Short Case Scenario 16-1 Jessica is looking forward to a family reunion at the beach. She is the first in her family to have graduated from college. She started her studies at the local community college and transferred to a prestigious private college several hours from her family's home. Jessica's major in college was business administration with a concentration in finance. As she approaches the beach house where her family will be staying, Jessica is glad that her days of being quizzed and tested are over. She is looking forward to an opportunity to relax and to put her brain on "pause." However, Jessica's family has other plans for her. Almost before she emerges from her car, the questions begin. Jessica's great-aunt Irene is hoping for a little investment advice. Irene explains, "One of my CDs has recently matured and I'm hoping to roll it into an investment where I might make a little more interest. Your cousin Eddie has suggested that I invest in bonds, but I'm not sure what to think. You know, dear, Eddie's never been very bright and I'd be foolish to take his advice without a little more information. -Should Jessica first suggest that her Aunt Irene use the Rule of 72?

Differentiate between market value and book value.

In return for their investment,angel investors typically expect a small piece of ownership in the company (up to 10 percent of its equity).

In a secured loan the borrower guarantees repayment of the loan by pledging the asset as interest to the lender.

A bull market is characterized by falling stock prices.

A stock's market value is ________.

What is the most important difference between traditional exchanges and the electronic market?

The ________ exchanges in the United States were organized to serve investors in places other than New York.

Each type of investment has a risk-return (risk-reward)relationship; whereas riskier investments tend to offer lower returns,safer investments tend to offer higher returns (rewards).

The largest stock exchange in the world is the Tokyo exchange.

The Dow Jones Industrial Average (DJIA)focuses on 30 large companies and has remained unchanged in recent years.

Market indexes provide useful summaries of overall price trends,both in specific industries and in the stock market as a whole.

What is a security?