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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 111

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If an individual investor places a limit order at $38 and the stock currently sells for $41 per share,the broker will buy the stock for the investor.

A) True
B) False

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Question 112

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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.

A) True
B) False

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Question 113

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A corporate bond provides the owner with the right to sell the bond to other investors at any time during the life of the bond.

Preferred stockholders possess the first right to purchase any new stock the company issues.

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.

Gerald,a recent graduate of a community college,is about to make his first investment in the stock market.Which of the following would be a cautious way for Gerald to start investing?

By issuing bonds with a _______,the corporation retains the right to pay off the bond prior to the maturity date.

From an investor's point of view,corporate bonds offer less risk than government bonds.

When investors purchase ________ stock,they receive a priority claim in the payment of dividends,as well as assets,if the business is liquidated.However,these investors do not have voting rights.

A well-diversified portfolio would consist of a variety of investments and even cash for emergencies.The important thing is that the choice of investments spreads the risk.Some investments may perform very well in any one year while others may lag.Those performing well will balance out those that are underperforming.

Investing online is usually ________ than trading through a traditional stock brokerage firm.

________ stocks represent investments in emerging fields that have the potential to realize better than average increases in the stock's prices.

Dan wanted to start investing some of his monthly earnings in stocks.He planned to diversify his holdings between blue chips,growth,and income type stocks.After consulting with a financial planner,he now understands the difference between these three types.The difference is:

Lamont bought a share of stock in the ABC Corporation for $50.When he sold the stock later that year,he received $70.The par value of the stock is $5.Lamont's capital gain is $25.

Georgia Corporation,known for its very generous dividend policy,easily attracts investors.These dividend payments basically represent:

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) :

The term ________ refers to investors who anticipate increases in stock prices.

As a registered representative of a stock brokerage firm,a stockbroker works as an intermediary to buy and sell securities for clients.

Bonds,like stocks,trade daily on major security exchanges.

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