Question 1

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

Accepted Answer

A)  higher 
B)  lower 
C)  more stable 
D)  less stable 
A)  higher 
B)  lower 
C)  more stable 
D)  less stable

Question 2

An investor places a ________ order with a broker to buy a particular stock at a specific price, if and when that price becomes available.

Accepted Answer

A)  call 
B)  market 
C)  put 
D)  limit 
A)  call 
B)  market 
C)  put 
D)  limit

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Both stocks and bonds represent temporary sources of funding for a firm. Eventually they must be repaid.

Accepted Answer

A) True 
 B)False

Question 5

Many stock market analysts suggest that program trading was a big cause of the stock market crash of 1987.

Accepted Answer

A) True 
 B)False

Question 6

Dividends on preferred stock are

Accepted Answer

A)  paid after common stockholders receive their dividends. 
B)  guaranteed, except in the event of bankruptcy. 
C)  normally fixed, if and when dividends are paid. 
D)  always greater than dividends on common stock. 
A)  paid after common stockholders receive their dividends. 
B)  guaranteed, except in the event of bankruptcy. 
C)  normally fixed, if and when dividends are paid. 
D)  always greater than dividends on common stock.

Question 7

The Dow Jones Industrial Average represents the average price of ________ industrial stocks.

Accepted Answer

A)  11 
B)  30 
C)  500 
D)  all the above 
A)  11 
B)  30 
C)  500 
D)  all the above

Question 8

According to the Connecting Through Social Media box, which of the following is a way the SEC changes altered securities laws following the JOBS Act?

Accepted Answer

A)  No longer required crowdinvestors to disclose their financial information to the SEC. 
B)  Required small businesses to have at least 100 employees before allowing crowdinvestors to be pursued. 
C)  Allowed a maximum of 20 crowdinvesting groups to invest in projects. 
D)  Allows businesses to accept crowdinvestments from both accredited and unaccredited investors. 
A)  No longer required crowdinvestors to disclose their financial information to the SEC. 
B)  Required small businesses to have at least 100 employees before allowing crowdinvestors to be pursued. 
C)  Allowed a maximum of 20 crowdinvesting groups to invest in projects. 
D)  Allows businesses to accept crowdinvestments from both accredited and unaccredited investors.

Question 9

When an investor purchases a security, the investor does so with the expectation of

Accepted Answer

A)  maintaining his or her capital position. 
B)  minimizing risk. 
C)  making a profit. 
D)  providing commissions. 
A)  maintaining his or her capital position. 
B)  minimizing risk. 
C)  making a profit. 
D)  providing commissions.

Question 10

When acquiring funds through the sale of a bond, the business incurs a legal obligation to pay regular interest payments.

Accepted Answer

A) True 
 B)False

Question 11

Investing in common stock can give an individual the opportunity to participate in the success or failure of a corporation.

Accepted Answer

A) True 
 B)False

Question 12

Katherine inherited $35,000 when her grandfather died and decided to invest it in the Leafy Greens restaurants. As a student of business, you inform her that she can call a stockbroker who will help her purchase stock on the secondary market.

Accepted Answer

A) True 
 B)False

Question 13

A(n) ________ refers to the first public offering of a corporation's stock.

Accepted Answer

A)  primary market offer (PMO) 
B)  initial securities proposal (ISP) 
C)  initial public offering (IPO) 
D)  primary public sale (PPS) 
A)  primary market offer (PMO) 
B)  initial securities proposal (ISP) 
C)  initial public offering (IPO) 
D)  primary public sale (PPS)

Question 14

The NASDAQ reports its own average that investors follow to observe trends in the market.

Accepted Answer

A) True 
 B)False

Question 15

Mineral Mining Corporation makes regular monetary deposits that will accumulate and provide for an orderly retirement of their bonds when they come due in 2025. Mineral Mining appears to be utilizing a

Accepted Answer

A)  call provision. 
B)  sinking fund. 
C)  compensating balance system. 
D)  retirement escrow account. 
A)  call provision. 
B)  sinking fund. 
C)  compensating balance system. 
D)  retirement escrow account.

Question 16

The Securities and Exchange Commission developed ________ to halt trading in the stock market for a short time when the market has experienced a dramatic decrease in prices.

Accepted Answer

A)  program trading 
B)  online investing 
C)  circuit breakers 
D)  insider trading 
A)  program trading 
B)  online investing 
C)  circuit breakers 
D)  insider trading

Question 17

The Dow Jones Industrial Average reflects the average of the eleven largest corporations traded on the New York Stock Exchange as originally selected by Charles Dow.

Accepted Answer

A) True 
 B)False

Question 18

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.

Accepted Answer

A)  the secondary market; prospectus 
B)  the NASDAQ; regulatory agreement 
C)  the OTC; regulatory agreement 
D)  the primary market; prospectus 
A)  the secondary market; prospectus 
B)  the NASDAQ; regulatory agreement 
C)  the OTC; regulatory agreement 
D)  the primary market; prospectus

Question 19

Stock exchanges compete with each other for the listing of a corporation's stock.

Accepted Answer

A) True 
 B)False

Question 20

Game Guys announced a 2-for-1 common stock split for investors on record. Which of the following will occur?

Accepted Answer

A)  The stock price will increase to reflect the value of two shares for every one share. 
B)  Each share will be worth ½ of its previous value, but shareholders' total value of Game Guys will remain the same. 
C)  The value of Game Guys common stock will remain the same, for a short period of time, and then experience a guaranteed growth spurt. 
D)  The shareholders will sell their shares immediately after the split and take their capital gains, as well as provide others an opportunity to invest in Game Guys. 
A)  The stock price will increase to reflect the value of two shares for every one share. 
B)  Each share will be worth ½ of its previous value, but shareholders' total value of Game Guys will remain the same. 
C)  The value of Game Guys common stock will remain the same, for a short period of time, and then experience a guaranteed growth spurt. 
D)  The shareholders will sell their shares immediately after the split and take their capital gains, as well as provide others an opportunity to invest in Game Guys.

Exam 19: Using Securities Markets for Financing and Investing Opportunities

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

An investor places a ________ order with a broker to buy a particular stock at a specific price, if and when that price becomes available.

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

Both stocks and bonds represent temporary sources of funding for a firm. Eventually they must be repaid.

Many stock market analysts suggest that program trading was a big cause of the stock market crash of 1987.

Dividends on preferred stock are

The Dow Jones Industrial Average represents the average price of ________ industrial stocks.

According to the Connecting Through Social Media box, which of the following is a way the SEC changes altered securities laws following the JOBS Act?

When an investor purchases a security, the investor does so with the expectation of

When acquiring funds through the sale of a bond, the business incurs a legal obligation to pay regular interest payments.

Investing in common stock can give an individual the opportunity to participate in the success or failure of a corporation.

Katherine inherited $35,000 when her grandfather died and decided to invest it in the Leafy Greens restaurants. As a student of business, you inform her that she can call a stockbroker who will help her purchase stock on the secondary market.

A(n) ________ refers to the first public offering of a corporation's stock.

The NASDAQ reports its own average that investors follow to observe trends in the market.

Mineral Mining Corporation makes regular monetary deposits that will accumulate and provide for an orderly retirement of their bonds when they come due in 2025. Mineral Mining appears to be utilizing a

The Securities and Exchange Commission developed ________ to halt trading in the stock market for a short time when the market has experienced a dramatic decrease in prices.

The Dow Jones Industrial Average reflects the average of the eleven largest corporations traded on the New York Stock Exchange as originally selected by Charles Dow.

Stock exchanges compete with each other for the listing of a corporation's stock.

Game Guys announced a 2-for-1 common stock split for investors on record. Which of the following will occur?

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

Appendix: Working Within the Legal Environment

Appendix: Using Technology to Manage Information

Appendix: Managing Risk

Appendix: Managing Personal Finances

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