Question 1

The electronic-based market for less actively traded U.S. securities is the

Accepted Answer

A) ADR market. 
B) OTC Bulletin Board. 
C) Pink Sheet stocks. 
D) NYSE Low Volume Market. 
E) ECN Market. 
A) ADR market. 
B) OTC Bulletin Board. 
C) Pink Sheet stocks. 
D) NYSE Low Volume Market. 
E) ECN Market.

Question 2

What are weak form,semi-strong form,and strong form efficiency?
 Does one form of efficiency imply another?

Accepted Answer

Weak form efficiency implies that past p

Question 3

Which of the following information is NOT usually found in a Wall Street Journal stock quote?

Accepted Answer

A) dividend yield 
B) price-earnings ratio 
C) closing price of the stock 
D) stock rating 
E) ticker symbol 
A) dividend yield 
B) price-earnings ratio 
C) closing price of the stock 
D) stock rating 
E) ticker symbol

Question 4

A shelf registration allows firms the opportunity to avoid the normal ______________ day waiting period by allowing preregistration of securities for up to ______________ years.

Accepted Answer

A) 20-; two 
B) 10-; one 
C) 15-; three 
D) 20-; one 
E) 30-; two 
A) 20-; two 
B) 10-; one 
C) 15-; three 
D) 20-; one 
E) 30-; two

Question 5

If all preferred dividend payments that have been missed must be paid before any common stock dividend can be paid,the preferred stock is called _____________ preferred stock.

Accepted Answer

A) cumulative 
B) participating 
C) nonparticipating 
D) voting 
E) dual class 
A) cumulative 
B) participating 
C) nonparticipating 
D) voting 
E) dual class

Question 6

A long-term investor in a high marginal tax bracket will normally prefer a dollar of capital gain to a dollar of dividend yield.

Accepted Answer

A) True 
 B)False

Question 7

You buy a stock for $34 per share and sell it for $36 after you collect a $1.00 per share dividend. Your pre-tax capital gain yield is ________________ and your pre-tax dividend yield is ________________.

Accepted Answer

A) 2.94 percent; 2.78 percent 
B) 8.82 percent; 0.00 percent 
C) 5.88 percent; 2.94 percent 
D) 5.56 percent; 2.78 percent 
E) 4.65 percent; 3.17 percent 
A) 2.94 percent; 2.78 percent 
B) 8.82 percent; 0.00 percent 
C) 5.88 percent; 2.94 percent 
D) 5.56 percent; 2.78 percent 
E) 4.65 percent; 3.17 percent

Question 8

Ethanol Lawn Mowers issued 500,000 shares to the public. The gross proceeds were $31,250,000 and the net proceeds were $30 million. Merrel Bench was the lead underwriter and deal negotiator,but 10 other investment bankers (one of which was Golden Sax)were also used to put up capital and help sell the issue. Which of the following statements is/are correct?
I. The public paid $62.50 a share.
II. Golden Sax was the originating house.
III. The spread per share was $3.50.
IV. Merrel Bench is the sole book running manager.
V. This offer was a syndicated deal.

Accepted Answer

A) I,II,and IV only 
B) III and V only 
C) I,IV,and V only 
D) II and III only 
E) I and V only 
A) I,II,and IV only 
B) III and V only 
C) I,IV,and V only 
D) II and III only 
E) I and V only

Question 9

You own 500 shares of common stock in a firm that has two million shares outstanding. The firm announces a plan to sell an additional 500,000 shares through a rights offering.
a. How many rights to purchase new shares will you receive?
b. Suppose that the market price per share is $30,but each right allows you to purchase a share of stock for $27. What should be the value of one right?
c. If you sold your rights,how much money should you make?

Accepted Answer

a. (500,000/2,000,000)* 500 =

Question 10

Dual class stock refers to firms with both common and preferred stock outstanding.

Accepted Answer

A) True 
 B)False

Question 11

The NYSE specialists are charged with
I. trading for their own account.
II. ensuring public limit orders are executed.
III. facilitating processing public market orders.

Accepted Answer

A) I only 
B) I and II only 
C) II and III only 
D) I and III only 
E) I,II,and III 
A) I only 
B) I and II only 
C) II and III only 
D) I and III only 
E) I,II,and III

Question 12

The NYSE recently merged with the London Stock Exchange to form the merged company NYSE Euronext.

Accepted Answer

A) True 
 B)False

Question 13

In terms of volume of trading and market value of firms traded,the _____________ is the largest U.S. stock market. In terms of number of firms traded,the ___________ is the largest in the United States.

Accepted Answer

A) NYSE; NYSE 
B) NASDAQ; NYSE 
C) NYSE; AMEX 
D) NYSE; NASDAQ 
E) NASDAQ; AMEX 
A) NYSE; NYSE 
B) NASDAQ; NYSE 
C) NYSE; AMEX 
D) NYSE; NASDAQ 
E) NASDAQ; AMEX

Question 14

Why have international stock prices fallen as a result of the subprime crisis in the United States?

Accepted Answer

U.S. economic growth slowed as a result

Question 15

A type of absentee ballot that allows a representative to vote on behalf of the stockholder is called a proxy.

Accepted Answer

A) True 
 B)False

Question 16

A seasoned equity offering occurs when an issuer that already has equity publicly trading issues new shares to the public.

Accepted Answer

A) True 
 B)False

Question 17

In 2007 the NYSE merged with _________________.

Accepted Answer

A) Nasdaq 
B) Euronext 
C) American Exchange 
D) Chicago Mercantile Exchange 
E) London Stock Exchange 
A) Nasdaq 
B) Euronext 
C) American Exchange 
D) Chicago Mercantile Exchange 
E) London Stock Exchange

Question 18

An investor has a 38 percent ordinary income tax rate and a 20 percent long-term capital gains tax rate. The investor holds stock in a firm that could pay its usual $1 per share dividend or reinvest the cash in the firm. The stock price is currently $30 per share. If the firm does not pay the dividend,the share price will rise. If it pays the dividend,the share price will stay the same. By how much must the share price rise if the dividend is not paid in order to make the investor indifferent between receiving the dividend or not?

Accepted Answer

A) $1.00 
B) $0.59 
C) $0.78 
D) $0.97 
E) $0.50 
A) $1.00 
B) $0.59 
C) $0.78 
D) $0.97 
E) $0.50

Question 19

The stamp on a prospectus accompanying a new issue that indicates the issue has not yet been approved for sale by the SEC is called the

Accepted Answer

A) green hornet. 
B) seal of approval. 
C) red herring. 
D) eagle stamp. 
E) Regd FD. 
A) green hornet. 
B) seal of approval. 
C) red herring. 
D) eagle stamp. 
E) Regd FD.

Question 20

Which of the following indexes are value-weighted?
I. NYSE Composite
II. S&P 500
III. NASDAQ Composite
IV. Dow Jones Industrial Average

Accepted Answer

A) I,II,III,and IV 
B) I only 
C) II only 
D) II,III,and IV only 
E) I,II,and III only 
A) I,II,III,and IV 
B) I only 
C) II only 
D) II,III,and IV only 
E) I,II,and III only

Exam 8: Stock Markets

The electronic-based market for less actively traded U.S. securities is the

What are weak form,semi-strong form,and strong form efficiency? Does one form of efficiency imply another?

Which of the following information is NOT usually found in a Wall Street Journal stock quote?

A shelf registration allows firms the opportunity to avoid the normal ______________ day waiting period by allowing preregistration of securities for up to ______________ years.

If all preferred dividend payments that have been missed must be paid before any common stock dividend can be paid,the preferred stock is called _____________ preferred stock.

A long-term investor in a high marginal tax bracket will normally prefer a dollar of capital gain to a dollar of dividend yield.

You buy a stock for $34 per share and sell it for $36 after you collect a $1.00 per share dividend. Your pre-tax capital gain yield is ________________ and your pre-tax dividend yield is ________________.

Dual class stock refers to firms with both common and preferred stock outstanding.

The NYSE specialists are charged with I. trading for their own account. II. ensuring public limit orders are executed. III. facilitating processing public market orders.

The NYSE recently merged with the London Stock Exchange to form the merged company NYSE Euronext.

In terms of volume of trading and market value of firms traded,the _____________ is the largest U.S. stock market. In terms of number of firms traded,the ___________ is the largest in the United States.

Why have international stock prices fallen as a result of the subprime crisis in the United States?

A type of absentee ballot that allows a representative to vote on behalf of the stockholder is called a proxy.

A seasoned equity offering occurs when an issuer that already has equity publicly trading issues new shares to the public.

In 2007 the NYSE merged with _________________.

The stamp on a prospectus accompanying a new issue that indicates the issue has not yet been approved for sale by the SEC is called the

Which of the following indexes are value-weighted? I. NYSE Composite II. S&P 500 III. NASDAQ Composite IV. Dow Jones Industrial Average

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

The Federal Reserve System, Monetary Policy, and Interest Rates

Money Markets

Bond Markets

Mortgage Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies

Insurance Companies

Securities Firms and Investment Banks

Investment Companies

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

Filters

A shelf registration allows firms the opportunity to avoid the normal day waiting period by allowing preregistration of securities for up to years.

You buy a stock for $34 per share and sell it for $36 after you collect a $1.00 per share dividend. Your pre-tax capital gain yield is and your pre-tax dividend yield is .

In terms of volume of trading and market value of firms traded,the ___ is the largest U.S. stock market. In terms of number of firms traded,the _ is the largest in the United States.