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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 41

Multiple Choice

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As a new father,Dave plans to accumulate funds over the next eighteen years to help pay for his son's college education.Security markets provide Dave with:

A) financing opportunities.
B) investing opportunities.
C) opportunities to reduce his taxes.
D) borrowing opportunities.

E) B) and C)
F) All of the above

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Question 42

Multiple Choice

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Suzanne wants to purchase stock in a company that is headquartered in Germany.Suzanne:

A) will have to place her order through the Frankfurt Stock Exchange.
B) cannot legally own the stock of a German corporation.
C) can buy the shares from a broker on a U.S.exchange.
D) must obtain an investor visa to complete the purchase.

E) A) and B)
F) All of the above

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Question 43

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Securities markets provide private investors a place to buy and sell stocks,bonds,and mutual funds.

Investors buying bonds and corporations issuing bonds both) accept investment risk.Which of the following statements is most correct when it comes to the investment that one or the other party accepts?

Cumulative preferred stockholders enjoy a promise that missed dividends will accumulate and be paid later,before any dividends are paid to common stockholders.

__________ represents the most basic form of company ownership and includes voting rights and dividends,if and when the firm elects to pay dividends.

When acquiring funds through the sale of a bond,the business incurs a legal obligation to pay regular interest payments.

Which of the following federal government agencies has responsibility for regulating the various stock exchanges in the U.S.?

The ABC Corporation issues a $1,000 bond,with an interest rate of 10%,and a maturity date of 2015.This creates a liability for the ABC Corporation to pay the bondholder:

Moody's Investor Service currently rates the Sasha Deal Corporation bonds as a C grade.This indicates that these bonds are:

Idle Time Gaming,Inc has reached a point in its life where it needs several million dollars in order to expand and follow its strategic plan.In negotiations with the investment banker,they agree to issue 40 million shares of common stock,at $22/share.If the Investment Banker's fee for underwriting the total sale is 6.82%,what is the discounted price that the investment bank is willing to pay Idle Time for the shares?

Which of the following statements best describes the current legal interpretation of insider trading?

The ________ is a large national electronic stock trading market.

Although you were not fortunate enough to get Chipper's Golf Resort stock [ticker symbol: CHPR] as an IPO,you are still thinking about trying to add some to your portfolio.Last week when you mentioned it to your broker,he said that there are plenty of shares trading on ____________,but,he wanted to send you the company's financial disclosures provided in the ______ before you finalize your decision.

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.

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

Government employees,public school system employees,and even employees of some large companies pay a percentage of their monthly earnings into pension funds.These funds collect a large pool of money that they invest in securities.Pension funds,insurance companies and mutual fund companies - who collect large sums of money and then invest these funds into stocks,bonds or other securities are called institutional investors.

Penny is impressed with contemporary high tech companies that have listed their stock on an electronic telecommunications network of securities dealers who trade the stock.She is referring to firms such as Microsoft [MSFT],Google [GOOG],and Apple [AAPL].Penny ideally would like her company's stock listed on the ____________.

To reduce market volatility,________ require that a key computer is turned off so that program trading must be done 'by hand' rather than automatically by computer.

When comparing the investments of different mutual funds,little variation in the risk level exists.