Question 1

When an investor sells a security for more than the purchase price, the investor earns a(n)

Accepted Answer

A)  dividend payment. 
B)  appreciated interest receipt. 
C)  corporate benefit. 
D)  capital gain. 
A)  dividend payment. 
B)  appreciated interest receipt. 
C)  corporate benefit. 
D)  capital gain.

Question 2

Stock market circuit breakers stop stock trading for a short time when the stock market experiences a significant drop in stock values.

Accepted Answer

A) True 
 B)False

Question 3

Stock certificates identify per share dividends, expressed as a percentage of par value.

Accepted Answer

A) True 
 B)False

Question 4

________ means that the mutual fund company does not show a fee or commission for investing in the fund.

Accepted Answer

A)  Front load 
B)  Back load 
C)  Double load 
D)  No load 
A)  Front load 
B)  Back load 
C)  Double load 
D)  No load

Question 5

Which of the following accurately describes an advantage of selling bonds to raise long-term capital?

Accepted Answer

A)  Interest is a legal obligation. 
B)  Face value must be repaid. 
C)  Bondholders have voting rights. 
D)  Interest is a tax-deductible expense. 
A)  Interest is a legal obligation. 
B)  Face value must be repaid. 
C)  Bondholders have voting rights. 
D)  Interest is a tax-deductible expense.

Question 6

In the Adapting to Change box, Millennials, who distrusted and overlooked traditional financial advisors, started using robo-advisors when investing.

Accepted Answer

A) True 
 B)False

Question 7

New investors may want to consider ________ funds, which are mutual funds that invest in one particular kind of stock or a particular kind of bond, or even stocks that are representative of the entire market.

Accepted Answer

A)  international 
B)  index 
C)  global 
D)  relief 
A)  international 
B)  index 
C)  global 
D)  relief

Question 8

Changes in investor trust and confidence strongly influence stock market prices.

Accepted Answer

A) True 
 B)False

Question 9

Buying stock on margin allows an investor to borrow funds from the brokerage company as part of the transaction. This ________ the potential return to the investor and ________ the risk.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 10

Standard & Poor's currently rates Careful Corporation bonds as a D grade. This indicates that these bonds are

Accepted Answer

A)  of the highest quality with lowest default risk. 
B)  moderately speculative. 
C)  corporate bonds with variable interest rates. 
D)  the lowest quality and the highest risk. 
A)  of the highest quality with lowest default risk. 
B)  moderately speculative. 
C)  corporate bonds with variable interest rates. 
D)  the lowest quality and the highest risk.

Question 11

A preferred stock's par value establishes the base used for calculating the preferred stockholders' dividend.

Accepted Answer

A) True 
 B)False

Question 12

The stock of companies that fail to meet a stock exchange's minimum requirements can be delisted.

Accepted Answer

A) True 
 B)False

Question 13

While common stockholders of corporations have voting rights, preferred stockholders generally do not.

Accepted Answer

A) True 
 B)False

Question 14

The investor always pays a fee when purchasing a share of a mutual fund.

Accepted Answer

A) True 
 B)False

Question 15

Although the interest rate is fixed when the bond is issued, the interest rate that one firm must pay compared to another may vary depending upon risk factors such as the reputation of the firm.

Accepted Answer

A) True 
 B)False

Question 16

A mutual fund's purpose is rapid investment growth, not to provide diversification for investors.

Accepted Answer

A) True 
 B)False

Question 17

Daily reporting of the Dow Jones Industrial Average serves to

Accepted Answer

A)  show the direction of the market over time. 
B)  distort short-term fluctuations for the financial community. 
C)  identify the beginning of a recession in the economy. 
D)  disclose the average price of a share of stock on the major exchanges. 
A)  show the direction of the market over time. 
B)  distort short-term fluctuations for the financial community. 
C)  identify the beginning of a recession in the economy. 
D)  disclose the average price of a share of stock on the major exchanges.

Question 18

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 19

________ are the firm's after tax profits that are distributed to stockholders.

Accepted Answer

A)  Equity capital 
B)  Interest payments 
C)  Dividends 
D)  Retained earnings 
A)  Equity capital 
B)  Interest payments 
C)  Dividends 
D)  Retained earnings

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 19: Using Securities Markets for Financing and Investing Opportunities

When an investor sells a security for more than the purchase price, the investor earns a(n)

Stock market circuit breakers stop stock trading for a short time when the stock market experiences a significant drop in stock values.

Stock certificates identify per share dividends, expressed as a percentage of par value.

________ means that the mutual fund company does not show a fee or commission for investing in the fund.

Which of the following accurately describes an advantage of selling bonds to raise long-term capital?

In the Adapting to Change box, Millennials, who distrusted and overlooked traditional financial advisors, started using robo-advisors when investing.

New investors may want to consider ________ funds, which are mutual funds that invest in one particular kind of stock or a particular kind of bond, or even stocks that are representative of the entire market.

Changes in investor trust and confidence strongly influence stock market prices.

Buying stock on margin allows an investor to borrow funds from the brokerage company as part of the transaction. This ________ the potential return to the investor and ________ the risk.

Standard & Poor's currently rates Careful Corporation bonds as a D grade. This indicates that these bonds are

A preferred stock's par value establishes the base used for calculating the preferred stockholders' dividend.

The stock of companies that fail to meet a stock exchange's minimum requirements can be delisted.

While common stockholders of corporations have voting rights, preferred stockholders generally do not.

The investor always pays a fee when purchasing a share of a mutual fund.

Although the interest rate is fixed when the bond is issued, the interest rate that one firm must pay compared to another may vary depending upon risk factors such as the reputation of the firm.

A mutual fund's purpose is rapid investment growth, not to provide diversification for investors.

Daily reporting of the Dow Jones Industrial Average serves to

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

________ are the firm's after tax profits that are distributed to stockholders.

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

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

Filters

Buying stock on margin allows an investor to borrow funds from the brokerage company as part of the transaction. This the potential return to the investor and the risk.