Question 1

A stock exchange is an organization of individuals coordinated to provide an institutional auction setting in which stocks can be bought and sold.

Accepted Answer

A) True 
 B)False

Question 2

Explain what aggressive growth funds are.

Accepted Answer

The answer of Explain what aggressive growth funds are....

Question 3

Asset allocation means buying several different kinds of investments rather than just one.

Accepted Answer

A) True 
 B)False

Question 4

Conservative investors prefer the higher risks and potential returns from long-term junk bonds and common stocks.

Accepted Answer

A) True 
 B)False

Question 5

Aggressive growth funds seek minimum long-term capital growth.

Accepted Answer

A) True 
 B)False

Question 6

Electronic communication networks have closed the door to around-the-clock and around-the-globe trading.

Accepted Answer

A) True 
 B)False

Question 7

Any company can have a bad year and decide to reduce or omit dividend payments to stockholders.

Accepted Answer

A) True 
 B)False

Question 8

Today's NYSE is a hybrid market that utilizes both floor and electronic trading.

Accepted Answer

A) True 
 B)False

Question 9

Short Case Scenario 16-1
Jessica is looking forward to a family reunion at the beach. She is the first in her family to have graduated from college. She started her studies at the local community college and transferred to a prestigious private college several hours from her family's home. Jessica's major in college was business administration with a concentration in finance.
As she approaches the beach house where her family will be staying, Jessica is glad that her days of being quizzed and tested are over. She is looking forward to an opportunity to relax and to put her brain on "pause." However, Jessica's family has other plans for her. Almost before she emerges from her car, the questions begin.
Jessica's great-aunt Irene is hoping for a little investment advice. Irene explains, "One of my CDs has recently matured and I'm hoping to roll it into an investment where I might make a little more interest. Your cousin Eddie has suggested that I invest in bonds, but I'm not sure what to think. You know, dear, Eddie's never been very bright and I'd be foolish to take his advice without a little more information.
-Jessica's brother wanders into the room."Jessica,my partnership is considering incorporating,and we're receiving conflicting advice about what type of stock to issue.I know that there is both common and preferred stock,but I don't know much more.We know we need money,but we don't know where to begin.What are the first steps in issuing stock?

Accepted Answer

The answer of Short Case Scenario 16-1
Jessica is looking forward...

Question 10

Because of the uncertainties involved in stock prices,investment professionals believe day-to-day prices to be a generally poor indicator of any stock's real value.

Accepted Answer

A) True 
 B)False

Question 11

Unlike many full-service brokers,discount brokers offer automated online services in all of the following EXCEPT:

Accepted Answer

A)  stock research 
B)  industry analysis 
C)  estate planning 
D)  screening for specific types of stocks

Question 12

How do firms meet their capital needs through debt financing and equity financing?

Accepted Answer

The answer of How do firms meet their capital needs...

Question 13

Each common share of common stock has a vote on major issues that are brought before the shareholders.

Accepted Answer

A) True 
 B)False

Question 14

If you invested $10,000 at seven percent interest for one year,you would earn $700 on your investment.If you reinvested the principal amount plus the interest you earned during the first year for another 4 years,how much would you end up with?

Accepted Answer

The answer of If you invested $10,000 at seven percent...

Question 15

Short Case Scenario 16-1
Jessica is looking forward to a family reunion at the beach. She is the first in her family to have graduated from college. She started her studies at the local community college and transferred to a prestigious private college several hours from her family's home. Jessica's major in college was business administration with a concentration in finance.
As she approaches the beach house where her family will be staying, Jessica is glad that her days of being quizzed and tested are over. She is looking forward to an opportunity to relax and to put her brain on "pause." However, Jessica's family has other plans for her. Almost before she emerges from her car, the questions begin.
Jessica's great-aunt Irene is hoping for a little investment advice. Irene explains, "One of my CDs has recently matured and I'm hoping to roll it into an investment where I might make a little more interest. Your cousin Eddie has suggested that I invest in bonds, but I'm not sure what to think. You know, dear, Eddie's never been very bright and I'd be foolish to take his advice without a little more information.
-Jessica's Aunt Irene is 80 years old.Should she consider the risk-return (risk reward)relationship?

Accepted Answer

The answer of Short Case Scenario 16-1
Jessica is looking forward...

Question 16

Bear markets are periods of rising stock prices,generally lasting 12 months or longer.

Accepted Answer

A) True 
 B)False

Question 17

Municipal bonds may be issued by federal,state,or local governments.

Accepted Answer

A) True 
 B)False

Question 18

A company is ripe for raiding when ________ .

Accepted Answer

A)  its stock price falls so shares can be cheaply bought 
B)  private owners lose some control of the company when shares are sold to the public 
C)  its stock prices are at an all time high 
D)  insider trading has taken place

Question 19

Existing stocks and bonds are sold in a large secondary securities market which is handled by the New York Stock Exchange and by online trading with electronic communication networks.

Accepted Answer

A) True 
 B)False

Question 20

Animal names have figured prominently in the stock market for years.Which animal listed below do we associate with a rising market?

Accepted Answer

A)  lamb 
B)  tiger 
C)  bear 
D)  bull

Exam 16: Managing Finances

A stock exchange is an organization of individuals coordinated to provide an institutional auction setting in which stocks can be bought and sold.

Explain what aggressive growth funds are.

Asset allocation means buying several different kinds of investments rather than just one.

Conservative investors prefer the higher risks and potential returns from long-term junk bonds and common stocks.

Aggressive growth funds seek minimum long-term capital growth.

Electronic communication networks have closed the door to around-the-clock and around-the-globe trading.

Any company can have a bad year and decide to reduce or omit dividend payments to stockholders.

Today's NYSE is a hybrid market that utilizes both floor and electronic trading.

Because of the uncertainties involved in stock prices,investment professionals believe day-to-day prices to be a generally poor indicator of any stock's real value.

Unlike many full-service brokers,discount brokers offer automated online services in all of the following EXCEPT:

How do firms meet their capital needs through debt financing and equity financing?

Each common share of common stock has a vote on major issues that are brought before the shareholders.

If you invested $10,000 at seven percent interest for one year,you would earn $700 on your investment.If you reinvested the principal amount plus the interest you earned during the first year for another 4 years,how much would you end up with?

Bear markets are periods of rising stock prices,generally lasting 12 months or longer.

Municipal bonds may be issued by federal,state,or local governments.

A company is ripe for raiding when ________ .

Existing stocks and bonds are sold in a large secondary securities market which is handled by the New York Stock Exchange and by online trading with electronic communication networks.

Animal names have figured prominently in the stock market for years.Which animal listed below do we associate with a rising market?