Exam 19: Using Securities Markets for Financing and Investing Opportunities

Which of the following would be classified as an institutional investor?

A well-diversified portfolio would consist of a variety of investments and even cash for emergencies. The important thing is that the choice of investments spreads the risk. Some investments may perform very well in any one year while others may lag. Those performing well will balance out those that are underperforming.

As creditors of a firm, bondholders enjoy voting privileges for the firm's board of directors' elections.

Callahan and Megan plan to invest in corporate securities. While Callahan plans to retire next year on his 65th birthday, Megan is celebrating her first job after college and her 22nd birthday. Which of the two investors would be well advised to choose a more conservative investment strategy?

To reduce market volatility, ________ require that a key computer is turned off so that program trading is halted.

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

Raising long-term funds through the sale of bonds requires the firm to make debt repayment when and if the organization has sufficient cash flow.

A sinking fund is a reserve account where the firm will periodically deposit funds in anticipation of repayment of a bond issue on the maturity date.

The maturity date of a bond refers to the date on which the interest payment is due to be paid.

The interest paid to bondholders represents the principal of the bond.

If a stock's closing price for the day is 32.47, the stock's price in U.S. dollars would be

Realizing that Iron Age Metalworks stock currently sells for $37 a share, Alex directed her broker to buy 100 shares if and when the price dropped to $31. Alex placed a ________ order with her broker.

The Dow Jones Industrial Average utilizes the prices of the same 30 companies' stocks each year to ensure consistency.

Investors earn a capital gain when they sell a stock for more than they paid for it.

The degree of risk in mutual fund investments remains nearly the same from one fund to the next.

Most investment advisors put mutual funds high on the list of recommended investments for experienced investors, but consider them too risky for beginning investors.

Brad told his stockbroker to buy 100 shares of Mineral Mining common stock if and when the price falls to $18 per share. Brad placed a(n)

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

Which of the following terms best describes the relationship between the New York Stock Exchange and the NASDAQ?

As a registered representative of a stock brokerage firm, a stockbroker works as an intermediary to buy and sell securities for clients.