Exam 8: Stock Markets

Suppose you own 500,000 shares of common stock in a firm with 40 million total shares outstanding. The firm announces a plan to sell an additional 5 million shares through a rights offering. The market value of the stock is $32.5 before the rights offering and the new shares are being offered to existing shareholders at a $2.50 discount. If you exercise your preemptive rights,how many of the new shares can you purchase?

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

You buy a stock for $30 per share and sell it for $33 after holding it for slightly over a year and collecting a $0.75 per share dividend. Your ordinary income tax rate is 28 percent and your capital gains tax rate is 20 percent. Your after-tax rate of return is ________.

If the stock markets are semi-strong efficient,stock prices reflect all historic and current public information about a firm but prices do not reflect inside information.

The NASDAQ automatic order execution system for individual traders placing buy or sell orders of 1,000 or fewer shares is called the

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

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