Question 1

Which of the following is not an odd lot of stock?

Accepted Answer

A)   10 shares
B)   20 shares
C)   3,000 shares
D)   78 sharesE) B) and D)
F) A) and D)

Question 2

U.S. government bonds are considered safe investments. Therefore such government bonds usually have a lower interest rate than corporate bonds.

Accepted Answer

A) True 
 B)False

Question 3

Jason instructed his stockbroker to buy 100 shares of Utah Industries common stock if and when the price falls to $25 per share. Jason placed a(n) :

Accepted Answer

A)   market order.
B)   odd-lot order.
C)   limit order.
D)   contingent order.E) A) and C)
F) B) and C)

Question 4

Stock certificates identify per share dividends, expressed as a percentage of par value.

Accepted Answer

A) True 
 B)False

Question 5

A company with cash flow shortages must pay common stockholders their dividends before paying preferred stockholders their dividends.

Accepted Answer

A) True 
 B)False

Question 6

The ABC Corporation issues a $1,000 bond, with an interest rate of 10%, and a maturity date of 2025. This creates a liability for the ABC Corporation to pay the bondholder:

Accepted Answer

A)   $100 interest per year and $1,000 in the year 2025.
B)   10% of the selling price of the bond.
C)   an interest payment equal to the dividend payment distributed to the common stockholders.
D)   $1,100 annually until the year 2025.E) None of the above
F) B) and C)

Question 7

When given a choice, businesses prefer to obtain long-term financing through retained earnings or by borrowing from a lending institution such as a bank.

Accepted Answer

A) True 
 B)False

Question 8

________ represent the best way for investors to have their investments managed by a trained specialist for a fee.

Accepted Answer

A)   Individual stocks
B)   Mutual funds
C)   Corporate bonds
D)   Government bondsE) A) and B)
F) None of the above

Question 9

Diversification means:

Accepted Answer

A)   allocating all your investment funds into one type of investment.
B)   buying investments on margin.
C)   being knowledgeable about the various types of investment opportunities.
D)   allocating your investment funds to several types of investments.E) All of the above
F) B) and D)

Question 10

When corporations elect to issue two or more shares of stock to existing stockholders for each share they currently own, they have initiated a(n)  _________.

Accepted Answer

A)   stock split
B)   dividend spread
C)   share dividend
D)   earnings splitE) None of the above
F) A) and B)

Question 11

Program trading refers to computer trading software that automatically sells stocks when their price dips to a predetermined level.

Accepted Answer

A) True 
 B)False

Question 12

When market interest rates increase, the selling price of existing bonds will:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   be less volatile.E) All of the above
F) None of the above

Question 13

Corporations that want to attract more investors by lowering the selling price of their common stock might consider declaring a:

Accepted Answer

A)   bankruptcy filing.
B)   cash dividend.
C)   margin call.
D)   stock split.E) All of the above
F) B) and C)

Question 14

Yolanda has an ownership interest in many different companies, yet she owns the shares of stock of just one organization. Yolanda undoubtedly owns shares in a(n) :

Accepted Answer

A)   investment trust.
B)   security account.
C)   options association.
D)   mutual fund.E) A) and D)
F) B) and C)

Question 15

A bond represents a contract of indebtedness issued by a corporation that promises payment of a principal amount plus interest at a specified future date.

Accepted Answer

A) True 
 B)False

Question 16

U.S. investors have invested $13 trillion in mutual funds.

Accepted Answer

A) True 
 B)False

Question 17

Securities markets represent the financial marketplaces for stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 18

The number of U.S. companies that are listed on foreign stock exchanges is declining.

Accepted Answer

A) True 
 B)False

Question 19

From a risk standpoint, stocks are considered the riskiest investments, followed by mutual funds, preferred stock, and ETFs. Bonds represent a lower-risk investment.

Accepted Answer

A) True 
 B)False

Question 20

On a mutual fund quotation, the Net Asset Value (NAV) = the number of persons who are investing in the fund.

Accepted Answer

A) True 
 B)False

Exam 19: Using Securities Markets for Financing and Investing Opportunities

Securities markets represent the financial marketplaces for stocks and bonds.

Correct AnswerverifiedShow Answer

When given a choice, businesses prefer to obtain long-term financing through retained earnings or by borrowing from a lending institution such as a bank.

Correct AnswerverifiedShow Answer

Yolanda has an ownership interest in many different companies, yet she owns the shares of stock of just one organization. Yolanda undoubtedly owns shares in a(n) :

Correct AnswerverifiedShow Answer

Stock certificates identify per share dividends, expressed as a percentage of par value.

Correct AnswerverifiedShow Answer

The ABC Corporation issues a $1,000 bond, with an interest rate of 10%, and a maturity date of 2025. This creates a liability for the ABC Corporation to pay the bondholder:

Correct AnswerverifiedShow Answer

________ represent the best way for investors to have their investments managed by a trained specialist for a fee.

Correct AnswerverifiedShow Answer

On a mutual fund quotation, the Net Asset Value (NAV) = the number of persons who are investing in the fund.

Correct AnswerverifiedShow Answer

Program trading refers to computer trading software that automatically sells stocks when their price dips to a predetermined level.

Correct AnswerverifiedShow Answer

A company with cash flow shortages must pay common stockholders their dividends before paying preferred stockholders their dividends.

Correct AnswerverifiedShow Answer

U.S. government bonds are considered safe investments. Therefore such government bonds usually have a lower interest rate than corporate bonds.

Correct AnswerverifiedShow Answer

When market interest rates increase, the selling price of existing bonds will:

Correct AnswerverifiedShow Answer

Diversification means:

Correct AnswerverifiedShow Answer

From a risk standpoint, stocks are considered the riskiest investments, followed by mutual funds, preferred stock, and ETFs. Bonds represent a lower-risk investment.

Correct AnswerverifiedShow Answer

A bond represents a contract of indebtedness issued by a corporation that promises payment of a principal amount plus interest at a specified future date.

Correct AnswerverifiedShow Answer

Jason instructed his stockbroker to buy 100 shares of Utah Industries common stock if and when the price falls to $25 per share. Jason placed a(n) :

Correct AnswerverifiedShow Answer

Which of the following is not an odd lot of stock?

Correct AnswerverifiedShow Answer

U.S. investors have invested $13 trillion in mutual funds.

Correct AnswerverifiedShow Answer

Corporations that want to attract more investors by lowering the selling price of their common stock might consider declaring a:

Correct AnswerverifiedShow Answer

The number of U.S. companies that are listed on foreign stock exchanges is declining.

Correct AnswerverifiedShow Answer

When corporations elect to issue two or more shares of stock to existing stockholders for each share they currently own, they have initiated a(n) _________.

Correct AnswerverifiedShow Answer

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