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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 131

True/False

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Both preferred stocks and bonds represent funding sources that require repayment to investors.

A) True
B) False

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Question 132

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Molly Manufacturing plans to issue $75 million of common stock.The firm will likely rely on the advice and assistance of a(n) :

A) Federal Reserve bank.
B) commercial bank.
C) mutual fund.
D) investment banker.

E) A) and B)
F) A) and C)

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Question 133

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Which of the following describes a benefit enjoyed by investors in mutual funds?

Index funds invest in one specific type of investment,for example,an index fund might only invest in income stocks,companies whose stocks pay dividends.

The stocks of high quality companies such as Coca-Cola and Microsoft are called blue chip stocks.

A callable bond allows a bondholder to exchange his/her bond for shares of common stock in the same corporation.

The New York Stock Exchange will underwrite new issues of stocks or bonds.

Interest rate on bonds is usually quoted as an annual rate,and paid:

Investors and corporations are on the opposite sides of the interest rate risk scenario.If interest rates go up to 7%,the bondholder holding a bond with a 6% interest rate knows that he could do better.If he is forced to sell his bond on the secondary market before it matures,he will receive less than the face value.

Buying stock on margin lowers the overall risk for the investor.

A mutual fund company buys securities from corporations and governments,and packages them together into a "mutual fund".It then ________________.

What is a stock exchange and what are the major U.S.exchanges? Who is responsible for regulating the exchanges?

Using information not available to the public to unfairly benefit in the stock market represents:

Lupe's stockbroker called to inform Lupe of a margin call that requires that she pay $1,000.This indicates that the value of Lupe's stock has:

Laura read about Living Longer Biotechnology,Inc.and wants to buy 100 common shares at $45 per share.Unfortunately,she only has $3000 available to invest.One risky strategy Laura could consider is:

The Securities and Exchange Commission does not intercede in any way in the process of an IPO.Doing so would disrupt the natural process of the capital markets.

One of the criticisms of the Dow Jones Industrial Average is that it does not include enough stocks to provide a good representation of the entire stock market.

Well-known foreign exchanges that also exchange the securities of U.S.firms include the London Exchange and the Tokyo Exchange.

Bond classifications include,but are not limited to Corporate bonds,T-bills,Treasury bonds,Treasury notes,and Municipal bonds.

Every time someone sells a stock believing the price has reached its maximum,someone else buys it believing the price will go still higher.