Question 1

New stocks and bonds are sold in what market?

Accepted Answer

A)  private placement market 
B)  secondary market 
C)  primary market 
D)  tertiary market 
E)  open market 
A)  private placement market 
B)  secondary market 
C)  primary market 
D)  tertiary market 
E)  open market

Question 2

Describe the services provided by investment banks.

Accepted Answer

Investment banks provide three important

Question 3

Which of the following statements is NOT True about dividend payments?

Accepted Answer

A)  Many companies distribute between 30 and 70 percent of their profits to shareholders. 
B)  Some firms, especially fast-growing companies, do not pay dividends. 
C)  Many fast-growing companies use cash earnings for expanding the company so that future earnings can grow even faster. 
D)  During unprofitable years, companies are still required by law to pay dividends to their stockholders. 
E)  Dividend payments are made to stockholders on a regular basis. 
A)  Many companies distribute between 30 and 70 percent of their profits to shareholders. 
B)  Some firms, especially fast-growing companies, do not pay dividends. 
C)  Many fast-growing companies use cash earnings for expanding the company so that future earnings can grow even faster. 
D)  During unprofitable years, companies are still required by law to pay dividends to their stockholders. 
E)  Dividend payments are made to stockholders on a regular basis.

Question 4

Explain what exchange-traded funds are and how they are tracked.

Accepted Answer

As with an index mutual fund, an exchang

Question 5

An investment bank operates in the secondary securities market.

Accepted Answer

A) True 
 B)False

Question 6

Tim wants to invest in stocks and bonds that will double his money in seven years. Which of the following interest rates should he be targeting?

Accepted Answer

A)  7% 
B)  7.2% 
C)  8% 
D)  10% 
E)  10.3% 
A)  7% 
B)  7.2% 
C)  8% 
D)  10% 
E)  10.3%

Question 7

Which of the following is a formal pledge (an IOU) obligating the issuer to pay interest periodically and repay the principal at maturity (a preset future date) to the lender?

Accepted Answer

A)  commercial bank loan 
B)  corporate bond 
C)  mutual fund 
D)  bond indenture 
E)  prospectus 
A)  commercial bank loan 
B)  corporate bond 
C)  mutual fund 
D)  bond indenture 
E)  prospectus

Question 8

"I am a chemist with the nation's largest chemical company. We have secretly developed a cure for three of the world's most serious epidemics. Before this news breaks out, I'm going to buy as many shares of stock in my company as I can get my hands on. Then I'll sit back and watch the stock price head for the sky." What is the person making this statement about to engage in?

Accepted Answer

A)  selling shares of stock 
B)  insider trading 
C)  blue-sky trading 
D)  open-market operations 
E)  investment banking 
A)  selling shares of stock 
B)  insider trading 
C)  blue-sky trading 
D)  open-market operations 
E)  investment banking

Question 9

Which of the following statements is True about common stocks as investments?

Accepted Answer

A)  Stocks are among the riskiest of all investments. 
B)  Stocks are most suitable for investors who seek security. 
C)  Stocks will never become worth less than their purchase price. 
D)  Stock prices reflect only government action. 
E)  Stock prices are easily manipulated. 
A)  Stocks are among the riskiest of all investments. 
B)  Stocks are most suitable for investors who seek security. 
C)  Stocks will never become worth less than their purchase price. 
D)  Stock prices reflect only government action. 
E)  Stock prices are easily manipulated.

Question 10

Aardvark is considering undertaking an IPO in order to raise money. Which of the following, if True, would strengthen the case for doing so?

Accepted Answer

A)  The company's expected stock price will be low. 
B)  The company wants to maintain internal control over all its decision-making. 
C)  The company's customer base has been in decline. 
D)  The company has a healthy amount of assets. 
E)  The company is in a significant amount of debt. 
A)  The company's expected stock price will be low. 
B)  The company wants to maintain internal control over all its decision-making. 
C)  The company's customer base has been in decline. 
D)  The company has a healthy amount of assets. 
E)  The company is in a significant amount of debt.

Question 11

Stock brokers earn commissions from the individuals and organizations for whom they place orders.

Accepted Answer

A) True 
 B)False

Question 12

Dynamo Motors has begun to sell corporate securities. Dynamo is required by law to offer future investors the opportunity to read a document that contains complete information on both the new issue and the corporation itself. What is that required document called?

Accepted Answer

A)  book report 
B)  affidavit 
C)  prospectus 
D)  order blank 
E)  corporate profile 
A)  book report 
B)  affidavit 
C)  prospectus 
D)  order blank 
E)  corporate profile

Question 13

Don Dillon is a 24-year-old graphic designer. He eventually wants to get married, raise a family, and buy a house. He knows that he has to start putting money away so that his goals can someday become a reality. He has heard that investing is risky because you can lose money as well as make money. So Don decides to play it safe and deposit money in a bank on a regular basis. Why might this not be his best strategy?

Accepted Answer

A)  Stock investments will always result in high returns. 
B)  It pays to take chances with your money. 
C)  You can actually lose money with bank savings due to inflation and taxes. 
D)  People usually benefit from risky investments. 
E)  Most savings accounts are insured by the FDIC. 
A)  Stock investments will always result in high returns. 
B)  It pays to take chances with your money. 
C)  You can actually lose money with bank savings due to inflation and taxes. 
D)  People usually benefit from risky investments. 
E)  Most savings accounts are insured by the FDIC.

Question 14

If you purchased a share of GE stock for $33.82, then sold it one year later for $36.50, what would the price appreciation be?

Accepted Answer

The price appreciation is $2.68 ($36.50

Question 15

In case of financial distress, the firm would pay its stockholders before paying its bondholders.

Accepted Answer

A) True 
 B)False

Question 16

A bond is said to be in default if the borrower fails to make payment when due to lenders.

Accepted Answer

A) True 
 B)False

Question 17

Marco is a bullish investor, but the stock market is currently bearish. What is Marco most likely to do?

Accepted Answer

A)  sell every stock and go to a 100 percent cash position 
B)  sell certain winning stocks to realize a profit and put the cash to work when the market decline appears to have ended 
C)  maintain all stock positions until the market completely recovers and then buy more stocks 
D)  sell losing stocks to avoid further losses, and hold onto winners 
E)  buy defensive stocks in the expectation that they will not fall much 
A)  sell every stock and go to a 100 percent cash position 
B)  sell certain winning stocks to realize a profit and put the cash to work when the market decline appears to have ended 
C)  maintain all stock positions until the market completely recovers and then buy more stocks 
D)  sell losing stocks to avoid further losses, and hold onto winners 
E)  buy defensive stocks in the expectation that they will not fall much

Question 18

When are corporate bonds attractive to a firm?

Accepted Answer

Bonds are attractive when firms need lar

Question 19

Trina is a loan borrower, and the terms of her loan say she must keep a portion of the loan amount on deposit with the bank in a non-interest-bearing account. What is Trina required to have?

Accepted Answer

A)  a compensating balance 
B)  an unsecured loan 
C)  an angel investor 
D)  venture capital 
E)  collateral 
A)  a compensating balance 
B)  an unsecured loan 
C)  an angel investor 
D)  venture capital 
E)  collateral

Question 20

Marcia has purchased some corporate bonds, which come with bond indentures that stipulate the terms. What is the most important detail of the bond indenture that Marcia should pay attention to?

Accepted Answer

A)  maturity date 
B)  face value 
C)  par value 
D)  dividend payments 
E)  amount invested 
A)  maturity date 
B)  face value 
C)  par value 
D)  dividend payments 
E)  amount invested

New stocks and bonds are sold in what market?

Describe the services provided by investment banks.

Which of the following statements is NOT True about dividend payments?

Explain what exchange-traded funds are and how they are tracked.

An investment bank operates in the secondary securities market.

Tim wants to invest in stocks and bonds that will double his money in seven years. Which of the following interest rates should he be targeting?

Which of the following is a formal pledge (an IOU) obligating the issuer to pay interest periodically and repay the principal at maturity (a preset future date) to the lender?

Which of the following statements is True about common stocks as investments?

Aardvark is considering undertaking an IPO in order to raise money. Which of the following, if True, would strengthen the case for doing so?

Stock brokers earn commissions from the individuals and organizations for whom they place orders.

Dynamo Motors has begun to sell corporate securities. Dynamo is required by law to offer future investors the opportunity to read a document that contains complete information on both the new issue and the corporation itself. What is that required document called?

If you purchased a share of GE stock for $33.82, then sold it one year later for $36.50, what would the price appreciation be?

In case of financial distress, the firm would pay its stockholders before paying its bondholders.

A bond is said to be in default if the borrower fails to make payment when due to lenders.

Marco is a bullish investor, but the stock market is currently bearish. What is Marco most likely to do?

When are corporate bonds attractive to a firm?

Trina is a loan borrower, and the terms of her loan say she must keep a portion of the loan amount on deposit with the bank in a non-interest-bearing account. What is Trina required to have?

Marcia has purchased some corporate bonds, which come with bond indentures that stipulate the terms. What is the most important detail of the bond indenture that Marcia should pay attention to?

The Us Business Environment

Business Ethics and Social Responsibility

Entrepreneurship, New Ventures, and Business Ownership

The Global Context of Business

Business Management

Organizing the Business

Operations Management and Quality

Employee Behavior and Motivation

Leadership and Decision Making

Human Resource Management and Labor Relations

Marketing Processes and Consumer Behavior

Pricing, Distributing, and Promoting Products

Information Technology for Business

The Role of Accountants and Accounting Information

Money and Banking

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Exam 16: Managing Finances

New stocks and bonds are sold in what market?

Describe the services provided by investment banks.

Which of the following statements is NOT True about dividend payments?

Explain what exchange-traded funds are and how they are tracked.

An investment bank operates in the secondary securities market.

Tim wants to invest in stocks and bonds that will double his money in seven years. Which of the following interest rates should he be targeting?

Which of the following is a formal pledge (an IOU) obligating the issuer to pay interest periodically and repay the principal at maturity (a preset future date) to the lender?

Which of the following statements is True about common stocks as investments?

Aardvark is considering undertaking an IPO in order to raise money. Which of the following, if True, would strengthen the case for doing so?

Stock brokers earn commissions from the individuals and organizations for whom they place orders.

Dynamo Motors has begun to sell corporate securities. Dynamo is required by law to offer future investors the opportunity to read a document that contains complete information on both the new issue and the corporation itself. What is that required document called?

If you purchased a share of GE stock for $33.82, then sold it one year later for $36.50, what would the price appreciation be?

In case of financial distress, the firm would pay its stockholders before paying its bondholders.

A bond is said to be in default if the borrower fails to make payment when due to lenders.

Marco is a bullish investor, but the stock market is currently bearish. What is Marco most likely to do?

When are corporate bonds attractive to a firm?

Trina is a loan borrower, and the terms of her loan say she must keep a portion of the loan amount on deposit with the bank in a non-interest-bearing account. What is Trina required to have?

Marcia has purchased some corporate bonds, which come with bond indentures that stipulate the terms. What is the most important detail of the bond indenture that Marcia should pay attention to?

The Us Business Environment

Business Ethics and Social Responsibility

Entrepreneurship, New Ventures, and Business Ownership

The Global Context of Business

Business Management

Organizing the Business

Operations Management and Quality

Employee Behavior and Motivation

Leadership and Decision Making

Human Resource Management and Labor Relations

Marketing Processes and Consumer Behavior

Pricing, Distributing, and Promoting Products

Information Technology for Business

The Role of Accountants and Accounting Information

Money and Banking

Filters