Question 1

Stock splits change the divisor in a price-weighted index but do not result in any net change in the divisor of a value-weighted index.

Accepted Answer

A) True 
 B)False

Question 2

Computerized markets that automatically match orders between buyers and sellers and are used primarily by institutions traders are called

Accepted Answer

A) OTC bulletin boards. 
B) SPIDRS. 
C) index markets. 
D) ECNs. 
E) specialists. 
A) OTC bulletin boards. 
B) SPIDRS. 
C) index markets. 
D) ECNs. 
E) specialists.

Question 3

The age group that holds the most stock is the ____________ group.

Accepted Answer

A) under 35 
B) 35-44 
C) 45-64 
D) 65 and older 
A) under 35 
B) 35-44 
C) 45-64 
D) 65 and older

Question 4

A firm desires to sell stock to the public. The underwriter charges $0.45 million in fees and offers to buy six million shares from the firm at a price of $35 per share. In addition,registration and audit fees total $130,000,and marketing and miscellaneous fees add up to another $75,000. The underwriter expects to earn gross proceeds per share of $38. What is the issuing firm's out-of-pocket dollar transaction cost to issue the stock?
 Immediately after the stock was issued,the stock price rose to $40. What is the issuing firm's opportunity cost?
 What is the total issuance cost,including opportunity costs,as a percentage of the total funds available to the issuing firm?

Accepted Answer

Out-of-pocket cost = $450,000 + $130,000

Question 5

What are the major effects of the Sarbanes-Oxley Act (SO)of 2002 on the stock markets?
 What else has the NYSE done to improve corporate governance?

Accepted Answer

The SO Act
* created an independent audi

Question 6

If the net proceeds are greater than the gross proceeds in an underwritten offering,then

Accepted Answer

A) the investment banker made a profit on the spread. 
B) the issuing company underpriced its securities. 
C) the issue fails to occur. 
D) the SEC rescinds the issue. 
E) none of the options 
A) the investment banker made a profit on the spread. 
B) the issuing company underpriced its securities. 
C) the issue fails to occur. 
D) the SEC rescinds the issue. 
E) none of the options

Question 7

What are the advantages and disadvantages of foreign investing?
 How does an ADR help overcome the disadvantages?

Accepted Answer

International investing can reduce risk

Question 8

The preliminary version of a security offer that is circulated to potential buyers before SEC approval (registration)is obtained is called a

Accepted Answer

A) final prospectus. 
B) shelf registration statement. 
C) due diligence draft. 
D) waiting period offer. 
E) red herring prospectus. 
A) final prospectus. 
B) shelf registration statement. 
C) due diligence draft. 
D) waiting period offer. 
E) red herring prospectus.

Question 9

As a small (minority)stockholder would you prefer to have cumulative voting or straight voting shares?
 As a majority shareholder?

Accepted Answer

Cumulative voting gives a small sharehol

Question 10

The preemptive right is designed to

Accepted Answer

A) allow management to diffuse stock ownership any voting power 
B) allow managers to preempt a stock offering if they do not like the terms of the deal 
C) allow existing shareholders the right to sell their existing shares before the new offer 
D) allow existing shareholders to buy shares of the new offering if they desire 
E) none of the options 
A) allow management to diffuse stock ownership any voting power 
B) allow managers to preempt a stock offering if they do not like the terms of the deal 
C) allow existing shareholders the right to sell their existing shares before the new offer 
D) allow existing shareholders to buy shares of the new offering if they desire 
E) none of the options

Question 11

Which of the following is/are true about specialists?
I. Investment banks generally cannot be specialists.
II. Specialists are used by the NASDAQ system.
III. Market and limit orders are transacted at specialist posts,but the specialist's own account orders are executed elsewhere.
IV. Specialists help maintain continuous trading.

Accepted Answer

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

Question 12

The market in which firms sell new securities to raise cash is called the secondary market.

Accepted Answer

A) True 
 B)False

Question 13

Preferred stockholders have a claim senior to common stock but junior to bondholders.

Accepted Answer

A) True 
 B)False

Question 14

Data show that only 11 of 27 recessions prior to 1990 were preceded by a decline in stock prices. Although stocks are a leading economic indicator,what are some reasons why a stock price decline might not indicate an upcoming recession?

Accepted Answer

Stock prices might drop because equity r

Question 15

On the NASDAQ system,the inside quotes are the

Accepted Answer

A) lowest ask and lowest bid 
B) lowest bid and highest ask 
C) highest bid and highest ask 
D) highest bid and lowest ask 
E) none of the options 
A) lowest ask and lowest bid 
B) lowest bid and highest ask 
C) highest bid and highest ask 
D) highest bid and lowest ask 
E) none of the options

Question 16

In the event of bankruptcy,a firm's janitor must be paid all of the salary owed to him before stockholders receive anything.

Accepted Answer

A) True 
 B)False

Stock splits change the divisor in a price-weighted index but do not result in any net change in the divisor of a value-weighted index.

Computerized markets that automatically match orders between buyers and sellers and are used primarily by institutions traders are called

The age group that holds the most stock is the ____________ group.

What are the major effects of the Sarbanes-Oxley Act (SO)of 2002 on the stock markets? What else has the NYSE done to improve corporate governance?

If the net proceeds are greater than the gross proceeds in an underwritten offering,then

What are the advantages and disadvantages of foreign investing? How does an ADR help overcome the disadvantages?

The preliminary version of a security offer that is circulated to potential buyers before SEC approval (registration)is obtained is called a

As a small (minority)stockholder would you prefer to have cumulative voting or straight voting shares? As a majority shareholder?

The preemptive right is designed to

The market in which firms sell new securities to raise cash is called the secondary market.

Preferred stockholders have a claim senior to common stock but junior to bondholders.

Data show that only 11 of 27 recessions prior to 1990 were preceded by a decline in stock prices. Although stocks are a leading economic indicator,what are some reasons why a stock price decline might not indicate an upcoming recession?

On the NASDAQ system,the inside quotes are the

In the event of bankruptcy,a firm's janitor must be paid all of the salary owed to him before stockholders receive anything.

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

Exam 8: Stock Markets

Stock splits change the divisor in a price-weighted index but do not result in any net change in the divisor of a value-weighted index.

Computerized markets that automatically match orders between buyers and sellers and are used primarily by institutions traders are called

The age group that holds the most stock is the ____________ group.

What are the major effects of the Sarbanes-Oxley Act (SO)of 2002 on the stock markets? What else has the NYSE done to improve corporate governance?

If the net proceeds are greater than the gross proceeds in an underwritten offering,then

What are the advantages and disadvantages of foreign investing? How does an ADR help overcome the disadvantages?

The preliminary version of a security offer that is circulated to potential buyers before SEC approval (registration)is obtained is called a

As a small (minority)stockholder would you prefer to have cumulative voting or straight voting shares? As a majority shareholder?

The preemptive right is designed to

The market in which firms sell new securities to raise cash is called the secondary market.

Preferred stockholders have a claim senior to common stock but junior to bondholders.

Data show that only 11 of 27 recessions prior to 1990 were preceded by a decline in stock prices. Although stocks are a leading economic indicator,what are some reasons why a stock price decline might not indicate an upcoming recession?

On the NASDAQ system,the inside quotes are the

In the event of bankruptcy,a firm's janitor must be paid all of the salary owed to him before stockholders receive anything.

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