Question 1

Magdala has told her broker to sell a certain security if its price falls to or below a specified amount.Magdala has given a(n)

Accepted Answer

A)  limit order. 
B)  stop order. 
C)  round lot order. 
D)  market order. 
E)  odd lot order. 
A)  limit order. 
B)  stop order. 
C)  round lot order. 
D)  market order. 
E)  odd lot order.

Question 2

Which investment has the greatest risk?

Accepted Answer

A)  Common stock 
B)  Stock options 
C)  Futures contracts in the commodities market 
D)  Municipal bond 
E)  A mutual fund with a safety strategy 
A)  Common stock 
B)  Stock options 
C)  Futures contracts in the commodities market 
D)  Municipal bond 
E)  A mutual fund with a safety strategy

Question 3

Suppose you purchased a $1000 par-value bond in 2004 for $650.Its stated interest rate is 6 percent and it matures in 2014.What is your yield?

Accepted Answer

A)  6.1 percent 
B)  7.2 percent 
C)  10.4 percent 
D)  9.2 percent 
E)  8.4 percent 
A)  6.1 percent 
B)  7.2 percent 
C)  10.4 percent 
D)  9.2 percent 
E)  8.4 percent

Question 4

What is an advantage of issuing a bond with a sinking fund provision?

Accepted Answer

A)  This provision offers greater security to an investor because funds to retire the bond issue are set aside each year into the sinking fund. 
B)  The bonds may be converted to a specified number of shares of common stock at the firm's convenience. 
C)  The firm has the right to call in the outstanding bonds at any time and thus "sink" the bond issue. 
D)  The firm can decide to redeem the fund at any time. 
E)  The firm may retire portions of the bond issue at different predetermined dates. 
A)  This provision offers greater security to an investor because funds to retire the bond issue are set aside each year into the sinking fund. 
B)  The bonds may be converted to a specified number of shares of common stock at the firm's convenience. 
C)  The firm has the right to call in the outstanding bonds at any time and thus "sink" the bond issue. 
D)  The firm can decide to redeem the fund at any time. 
E)  The firm may retire portions of the bond issue at different predetermined dates.

Question 5

What is a mutual fund?

Accepted Answer

A)  A mutual fund is a pool of funds established by corporate financial managers to provide for short-term business loans. 
B)  A mutual fund is a loan to the federal government made by a business firm. 
C)  Investors pool resources from individuals and business firms to purchase a portfolio of stocks,bonds,and short-term securities. 
D)  A mutual fund consists of money raised by selling a share of ownership in a business firm. 
E)  A mutual fund is a product sold by mutual life companies. 
A)  A mutual fund is a pool of funds established by corporate financial managers to provide for short-term business loans. 
B)  A mutual fund is a loan to the federal government made by a business firm. 
C)  Investors pool resources from individuals and business firms to purchase a portfolio of stocks,bonds,and short-term securities. 
D)  A mutual fund consists of money raised by selling a share of ownership in a business firm. 
E)  A mutual fund is a product sold by mutual life companies.

Question 6

If the stock of Vogue Cosmetics were reported in The Globe and Mail as selling for 24.50,you would have to pay ________ per share.

Accepted Answer

A)  $245.00 
B)  $2450.00 if you buy between 100 and 200 shares 
C)  $24.00 for one half of a share 
D)  $24.50 
E)  $24.05 
A)  $245.00 
B)  $2450.00 if you buy between 100 and 200 shares 
C)  $24.00 for one half of a share 
D)  $24.50 
E)  $24.05

Question 7

Issuers of bonds are most likely to call them in when

Accepted Answer

A)  the prevailing rate of interest exceeds that stipulated on the bonds. 
B)  investor confidence goes down. 
C)  the prevailing rate of interest is less than that stipulated on the bonds. 
D)  investor confidence goes up. 
E)  the government revises its capital gains tax law. 
A)  the prevailing rate of interest exceeds that stipulated on the bonds. 
B)  investor confidence goes down. 
C)  the prevailing rate of interest is less than that stipulated on the bonds. 
D)  investor confidence goes up. 
E)  the government revises its capital gains tax law.

Question 8

What is a bond?

Accepted Answer

A bond is an IOU-a written pro

Question 9

Les says that it is foolish to invest in the stock market because you can lose money.It is much better to simply put your money in a savings account where it is safe.Laura agrees that investing is risky,but says that even relatively low-risk investments will earn more than the low rate of interest that is paid in a savings account.Which of the following assumptions is Laura making?

Accepted Answer

A)  Inflation will be higher than the interest rate paid on a savings account. 
B)  Any stock will eventually go up in value,given enough time. 
C)  Riskier investments have more value over a long period of time. 
D)  If you invest in more stocks,their value will be higher. 
E)  The stock market will experience net growth over time. 
A)  Inflation will be higher than the interest rate paid on a savings account. 
B)  Any stock will eventually go up in value,given enough time. 
C)  Riskier investments have more value over a long period of time. 
D)  If you invest in more stocks,their value will be higher. 
E)  The stock market will experience net growth over time.

Question 10

The real value of a share of common stock is its market value.

Accepted Answer

A) True 
 B)False

Question 11

Identify the three major types of bonds and identify the biggest advantage of each.

Accepted Answer

- government bonds: lowest ris

Question 12

Regarding the issue of investor relations,it is correct to say that

Accepted Answer

A)  investor relations activities do not have much impact on the price of a firm's shares. 
B)  investor relations may include inviting financial analysts to one of the operating sites of a firm. 
C)  investor relations is a relatively new idea that began to be practised in the late 1990s. 
D)  investor relations are not that important to a firm's success. 
E)  investor relations targets individual buyers of corporate stock rather than brokers and financial analysts. 
A)  investor relations activities do not have much impact on the price of a firm's shares. 
B)  investor relations may include inviting financial analysts to one of the operating sites of a firm. 
C)  investor relations is a relatively new idea that began to be practised in the late 1990s. 
D)  investor relations are not that important to a firm's success. 
E)  investor relations targets individual buyers of corporate stock rather than brokers and financial analysts.

Question 13

What is the meaning of par value when discussing common stock?

Accepted Answer

A)  The current price of a share of stock 
B)  The selling price of the previous day's last transactions involving that stock 
C)  The average price paid on the previous day's trades 
D)  The face value of a share of common stock 
E)  One dollar 
A)  The current price of a share of stock 
B)  The selling price of the previous day's last transactions involving that stock 
C)  The average price paid on the previous day's trades 
D)  The face value of a share of common stock 
E)  One dollar

Question 14

Which of the following is correct with respect to stock exchanges?

Accepted Answer

A)  All of the people working on the trading floor are employed by the exchange. 
B)  Anyone is allowed to trade on the exchange. 
C)  The general public is allowed to participate in the actual buying and selling of stock on the exchange floor. 
D)  Memberships on a stock exchange cannot be bought or sold. 
E)  Most are non-profit organizations. 
A)  All of the people working on the trading floor are employed by the exchange. 
B)  Anyone is allowed to trade on the exchange. 
C)  The general public is allowed to participate in the actual buying and selling of stock on the exchange floor. 
D)  Memberships on a stock exchange cannot be bought or sold. 
E)  Most are non-profit organizations.

Question 15

A preferred stock is usually issued with a stated par value,and dividends are typically expressed as a percentage of that par value.

Accepted Answer

A) True 
 B)False

Question 16

________ are private pools of money that try to give investors a positive return regardless of stock market performance,and often engage in practices like short-selling and leveraging.

Accepted Answer

A)  Mutual funds 
B)  Ethical funds 
C)  Stock purchase plans 
D)  Commodities 
E)  Hedge funds 
A)  Mutual funds 
B)  Ethical funds 
C)  Stock purchase plans 
D)  Commodities 
E)  Hedge funds

Question 17

Suppose you were interested in purchasing a printing company.This might be an attractive target if the ________ value of the stock were less than the ________ value.

Accepted Answer

A)  book; market 
B)  par; market 
C)  book; par 
D)  market; book 
E)  market; par 
A)  book; market 
B)  par; market 
C)  book; par 
D)  market; book 
E)  market; par

Question 18

With cumulative preferred stock,any dividend payment the firm misses must be paid in later periods before any dividend payments are made to holders of common stock.

Accepted Answer

A) True 
 B)False

Question 19

In a short sale of stocks,you can sell stocks that you don't own.

Accepted Answer

A) True 
 B)False

Question 20

An investment banker helps companies create new securities,but does not actually bear any of the risk that is involved with new securities.

Accepted Answer

A) True 
 B)False

Magdala has told her broker to sell a certain security if its price falls to or below a specified amount.Magdala has given a(n)

Which investment has the greatest risk?

Suppose you purchased a $1000 par-value bond in 2004 for $650.Its stated interest rate is 6 percent and it matures in 2014.What is your yield?

What is an advantage of issuing a bond with a sinking fund provision?

What is a mutual fund?

If the stock of Vogue Cosmetics were reported in The Globe and Mail as selling for 24.50,you would have to pay ________ per share.

Issuers of bonds are most likely to call them in when

What is a bond?

The real value of a share of common stock is its market value.

Identify the three major types of bonds and identify the biggest advantage of each.

Regarding the issue of investor relations,it is correct to say that

What is the meaning of par value when discussing common stock?

Which of the following is correct with respect to stock exchanges?

A preferred stock is usually issued with a stated par value,and dividends are typically expressed as a percentage of that par value.

________ are private pools of money that try to give investors a positive return regardless of stock market performance,and often engage in practices like short-selling and leveraging.

Suppose you were interested in purchasing a printing company.This might be an attractive target if the value of the stock were less than the value.

With cumulative preferred stock,any dividend payment the firm misses must be paid in later periods before any dividend payments are made to holders of common stock.

In a short sale of stocks,you can sell stocks that you don't own.

An investment banker helps companies create new securities,but does not actually bear any of the risk that is involved with new securities.

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Accounting Issues

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Financial Decisions and Risk Management

Filters

Exam 19: Understanding Securities and Investments

Magdala has told her broker to sell a certain security if its price falls to or below a specified amount.Magdala has given a(n)

Which investment has the greatest risk?

Suppose you purchased a $1000 par-value bond in 2004 for $650.Its stated interest rate is 6 percent and it matures in 2014.What is your yield?

What is an advantage of issuing a bond with a sinking fund provision?

What is a mutual fund?

If the stock of Vogue Cosmetics were reported in The Globe and Mail as selling for 24.50,you would have to pay ________ per share.

Issuers of bonds are most likely to call them in when

What is a bond?

The real value of a share of common stock is its market value.

Identify the three major types of bonds and identify the biggest advantage of each.

Regarding the issue of investor relations,it is correct to say that

What is the meaning of par value when discussing common stock?

Which of the following is correct with respect to stock exchanges?

A preferred stock is usually issued with a stated par value,and dividends are typically expressed as a percentage of that par value.

________ are private pools of money that try to give investors a positive return regardless of stock market performance,and often engage in practices like short-selling and leveraging.

Suppose you were interested in purchasing a printing company.This might be an attractive target if the ________ value of the stock were less than the ________ value.

With cumulative preferred stock,any dividend payment the firm misses must be paid in later periods before any dividend payments are made to holders of common stock.

In a short sale of stocks,you can sell stocks that you don't own.

An investment banker helps companies create new securities,but does not actually bear any of the risk that is involved with new securities.

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Accounting Issues

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Financial Decisions and Risk Management

Filters

Suppose you were interested in purchasing a printing company.This might be an attractive target if the value of the stock were less than the value.