Question 1

When an investment bank "underwrites" a new security,it is

Accepted Answer

A)  assessing the risk of that new security. 
B)  privately supporting the issuing organization. 
C)  buying the new security. 
D)  co-signing the bonds. 
E)  attesting to the good investment potential of the new security. 
A)  assessing the risk of that new security. 
B)  privately supporting the issuing organization. 
C)  buying the new security. 
D)  co-signing the bonds. 
E)  attesting to the good investment potential of the new security.

Question 2

Hedge funds try to give investors a positive return regardless of stock market performance.They therefore avoid risky practices like short-selling and leveraging.

Accepted Answer

A) True 
 B)False

Question 3

When interest rates move up,bond prices tend to

Accepted Answer

A)  move down. 
B)  stay about the same. 
C)  move up. 
D)  move up,but only if the company is making a profit. 
E)  there is no general pattern of movement. 
A)  move down. 
B)  stay about the same. 
C)  move up. 
D)  move up,but only if the company is making a profit. 
E)  there is no general pattern of movement.

Question 4

A ________ is the right to buy a particular stock at a certain price until a particular date,while a ________ gives the owner the right to sell a particular stock at a specified price until a particular date.

Accepted Answer

A)  put option; call option 
B)  limit order; sales order 
C)  call option; put option 
D)  sales order; limit order 
E)  market purchase order; market sales order 
A)  put option; call option 
B)  limit order; sales order 
C)  call option; put option 
D)  sales order; limit order 
E)  market purchase order; market sales order

Question 5

Common stock issued by a well-established company with a sound financial history and a stable pattern of dividend payouts is a(n)

Accepted Answer

A)  preferred stock. 
B)  market leader stock. 
C)  blue chip stock. 
D)  blue sky stock. 
E)  IPO. 
A)  preferred stock. 
B)  market leader stock. 
C)  blue chip stock. 
D)  blue sky stock. 
E)  IPO.

Question 6

Mike owns a mutual fund that includes a balance of bonds,preferred stocks,and common stocks,especially the common stocks of established firms.His mutual fund is emphasizing

Accepted Answer

A)  aggressive growth. 
B)  growth. 
C)  safety. 
D)  stability. 
E)  high current income. 
A)  aggressive growth. 
B)  growth. 
C)  safety. 
D)  stability. 
E)  high current income.

Question 7

NASDAQ is a stock market that operates by broadcasting trading information on an intranet to more than 350 000 terminals worldwide.

Accepted Answer

A) True 
 B)False

Question 8

Differentiate between bull and bear markets.

Accepted Answer

A bull market is a period of r

Question 9

The par value of a stock reflects a buyer's willingness to invest in a business firm.

Accepted Answer

A) True 
 B)False

Question 10

What is cumulative preferred stock?

Accepted Answer

With cumulative preferred stock,any divi

Question 11

Which market handles the buying and selling of new stocks and bonds by business firms or governments?

Accepted Answer

A)  The primary securities market 
B)  The tertiary security market 
C)  The over-the-counter market 
D)  The commodities market 
E)  The secondary securities market 
A)  The primary securities market 
B)  The tertiary security market 
C)  The over-the-counter market 
D)  The commodities market 
E)  The secondary securities market

Question 12

Preferred shares are generally more risky than common shares because interest rates may drop and preferred shareholders will then earn less on their investment than they originally expected.

Accepted Answer

A) True 
 B)False

Question 13

If you bought a corporation bond that was selling for 155 1/4,how much would it cost you?

Accepted Answer

A)  $155.25 
B)  $1555.25 
C)  $1552.50 
D)  $1000.00 
E)  It depends on how much demand there is for the bond. 
A)  $155.25 
B)  $1555.25 
C)  $1552.50 
D)  $1000.00 
E)  It depends on how much demand there is for the bond.

Question 14

Periods of falling stock prices are called bull markets.

Accepted Answer

A) True 
 B)False

Question 15

Dennis computes the market capitalization of the company he works for by

Accepted Answer

A)  adding up all the fixed assets the company owns and subtracting the money still owed on those fixed assets. 
B)  multiplying the market price of one share of the company's stock by the total number of shares outstanding. 
C)  adding up all the funds the company has received through selling its stock. 
D)  adding up the book value,par value,and market value of the company's stock. 
E)  adding up the company's assets and subtracting its liabilities. 
A)  adding up all the fixed assets the company owns and subtracting the money still owed on those fixed assets. 
B)  multiplying the market price of one share of the company's stock by the total number of shares outstanding. 
C)  adding up all the funds the company has received through selling its stock. 
D)  adding up the book value,par value,and market value of the company's stock. 
E)  adding up the company's assets and subtracting its liabilities.

Question 16

Sally has instructed her broker to buy a certain stock if,and only if,its share price is $70 or less.Sally has placed a limit buy order.

Accepted Answer

A) True 
 B)False

Question 17

The ________ is the percentage of the total sales price that a buyer must put up to place an order for a stock or a futures contract.

Accepted Answer

A)  installment 
B)  up-front money 
C)  purchase money 
D)  down payment 
E)  margin 
A)  installment 
B)  up-front money 
C)  purchase money 
D)  down payment 
E)  margin

Question 18

Assume that you order your broker to sell short 100 shares of a company whose stock is trading at $38 per share.If the company's price later falls to $32 per share and you buy 100 shares,you will make a $600 profit (before brokers' commissions).

Accepted Answer

A) True 
 B)False

Question 19

Why are stocks and bonds called "securities"?

Accepted Answer

A)  Because investors have financial security by owning them 
B)  Because they are used to secure sales revenue for companies 
C)  Because they represent secured,or asset-based,claims on the part of investors 
D)  Because they are guaranteed by the Government of Canada 
E)  All of these are reasons 
A)  Because investors have financial security by owning them 
B)  Because they are used to secure sales revenue for companies 
C)  Because they represent secured,or asset-based,claims on the part of investors 
D)  Because they are guaranteed by the Government of Canada 
E)  All of these are reasons

Question 20

Discuss the methods by which bonds may be retired.Which method offers the greatest security for investors? Which method does the issuing firm prefer?

Accepted Answer

- callable bonds: a bond that may be pai

When an investment bank "underwrites" a new security,it is

Hedge funds try to give investors a positive return regardless of stock market performance.They therefore avoid risky practices like short-selling and leveraging.

When interest rates move up,bond prices tend to

A is the right to buy a particular stock at a certain price until a particular date,while a gives the owner the right to sell a particular stock at a specified price until a particular date.

Common stock issued by a well-established company with a sound financial history and a stable pattern of dividend payouts is a(n)

Mike owns a mutual fund that includes a balance of bonds,preferred stocks,and common stocks,especially the common stocks of established firms.His mutual fund is emphasizing

NASDAQ is a stock market that operates by broadcasting trading information on an intranet to more than 350 000 terminals worldwide.

Differentiate between bull and bear markets.

The par value of a stock reflects a buyer's willingness to invest in a business firm.

What is cumulative preferred stock?

Which market handles the buying and selling of new stocks and bonds by business firms or governments?

Preferred shares are generally more risky than common shares because interest rates may drop and preferred shareholders will then earn less on their investment than they originally expected.

If you bought a corporation bond that was selling for 155 1/4,how much would it cost you?

Periods of falling stock prices are called bull markets.

Dennis computes the market capitalization of the company he works for by

Sally has instructed her broker to buy a certain stock if,and only if,its share price is $70 or less.Sally has placed a limit buy order.

The ________ is the percentage of the total sales price that a buyer must put up to place an order for a stock or a futures contract.

Assume that you order your broker to sell short 100 shares of a company whose stock is trading at $38 per share.If the company's price later falls to $32 per share and you buy 100 shares,you will make a $600 profit (before brokers' commissions).

Why are stocks and bonds called "securities"?

Discuss the methods by which bonds may be retired.Which method offers the greatest security for investors? Which method does the issuing firm prefer?

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

When an investment bank "underwrites" a new security,it is

Hedge funds try to give investors a positive return regardless of stock market performance.They therefore avoid risky practices like short-selling and leveraging.

When interest rates move up,bond prices tend to

A ________ is the right to buy a particular stock at a certain price until a particular date,while a ________ gives the owner the right to sell a particular stock at a specified price until a particular date.

Common stock issued by a well-established company with a sound financial history and a stable pattern of dividend payouts is a(n)

Mike owns a mutual fund that includes a balance of bonds,preferred stocks,and common stocks,especially the common stocks of established firms.His mutual fund is emphasizing

NASDAQ is a stock market that operates by broadcasting trading information on an intranet to more than 350 000 terminals worldwide.

Differentiate between bull and bear markets.

The par value of a stock reflects a buyer's willingness to invest in a business firm.

What is cumulative preferred stock?

Which market handles the buying and selling of new stocks and bonds by business firms or governments?

Preferred shares are generally more risky than common shares because interest rates may drop and preferred shareholders will then earn less on their investment than they originally expected.

If you bought a corporation bond that was selling for 155 1/4,how much would it cost you?

Periods of falling stock prices are called bull markets.

Dennis computes the market capitalization of the company he works for by

Sally has instructed her broker to buy a certain stock if,and only if,its share price is $70 or less.Sally has placed a limit buy order.

The ________ is the percentage of the total sales price that a buyer must put up to place an order for a stock or a futures contract.

Assume that you order your broker to sell short 100 shares of a company whose stock is trading at $38 per share.If the company's price later falls to $32 per share and you buy 100 shares,you will make a $600 profit (before brokers' commissions).

Why are stocks and bonds called "securities"?

Discuss the methods by which bonds may be retired.Which method offers the greatest security for investors? Which method does the issuing firm prefer?

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

A is the right to buy a particular stock at a certain price until a particular date,while a gives the owner the right to sell a particular stock at a specified price until a particular date.