Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Issuing new stock increases the firm's outstanding debt on their balance sheet.

Accepted Answer

A) True 
 B)False

Question 3

Similar to bond investments,preferred shares can be ________,meaning the firm may buy them back.

Accepted Answer

A)   cumulative
B)   callable
C)   responsive
D)   retroactiveE) B) and D)
F) A) and C)

Question 4

By issuing bonds,a firm's debt level increases which may adversely affect the firm's image in the financial community.

Accepted Answer

A) True 
 B)False

Question 5

Issuing stock is considered equity financing.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

For starters,investors should consider the return on investment,the liquidity and riskiness of an investment.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   10 shares
B)   20 shares
C)   3000 shares
D)   78 sharesE) B) and D)
F) C) and D)

Question 9

When stock prices decline steadily,investors refer to the market as a ________ market.

Accepted Answer

A)   bear
B)   bull
C)   dog
D)   lionE) B) and D)
F) B) and C)

Question 10

Explain the major advantages and disadvantages of issuing stock as a source of long-term financing.

Accepted Answer

Raising long-term capital through equity...

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

A ________ certificate provides evidence of ownership in a specific corporation.

Accepted Answer

A)   stock
B)   bond
C)   debt
D)   capitalE) None of the above
F) A) and D)

Question 13

The high start-up costs of web-based businesses cause online brokers to charge higher commissions than traditional brokerage firms.

Accepted Answer

A) True 
 B)False

Question 14

From an investor's viewpoint,bonds generally provide a safer investment option than does the stock of the same corporation.

Accepted Answer

A) True 
 B)False

Question 15

A ________ is a registered representative acting as an intermediary to buy and sell securities for clients.

Accepted Answer

A)   certified stock underwriter
B)   stockbroker
C)   securities banker
D)   trading accountantE) B) and C)
F) A) and D)

Question 16

Par value reflects the current market price for a stock.

Accepted Answer

A) True 
 B)False

Question 17

A no-load mutual fund charges no commission fees to buy or sell its shares.

Accepted Answer

A) True 
 B)False

Question 18

Mutual fund investors will note that:

Accepted Answer

A)   Fund managers have not yet added foreign securities into their funds.
B)   Mutual funds cannot be purchased through a traditional brokerage house.
C)   Loads can vary from one mutual fund to another.The fund manger dictates the commissions and fees.
D)   By law,mutual funds can no longer charge loads.E) B) and D)
F) All of the above

Question 19

Bonds offering a higher interest rate than other bonds of similar risk,will likely sell at a:

Accepted Answer

A)   secondary market.
B)   discount.
C)   premium.
D)   price equal to the face value of the bonD.E) A) and B)
F) None of the above

Question 20

Corporate bonds provide investors the option of reselling the bond back to the issuing corporation at any time during the life of the bond.

Accepted Answer

A) True 
 B)False

Exam 19: Using Securities Markets for Financing and Investing Opportunities

When stock prices decline steadily,investors refer to the market as a ________ market.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Corporate bonds provide investors the option of reselling the bond back to the issuing corporation at any time during the life of the bond.

Correct AnswerverifiedShow Answer

A ________ is a registered representative acting as an intermediary to buy and sell securities for clients.

Correct AnswerverifiedShow Answer

Bonds offering a higher interest rate than other bonds of similar risk,will likely sell at a:

Correct AnswerverifiedShow Answer

By issuing bonds,a firm's debt level increases which may adversely affect the firm's image in the financial community.

Correct AnswerverifiedShow Answer

From an investor's viewpoint,bonds generally provide a safer investment option than does the stock of the same corporation.

Correct AnswerverifiedShow Answer

For starters,investors should consider the return on investment,the liquidity and riskiness of an investment.

Correct AnswerverifiedShow Answer

Explain the major advantages and disadvantages of issuing stock as a source of long-term financing.

Correct AnswerverifiedRaising long-term capital through equity...View AnswerShow Answer

Issuing new stock increases the firm's outstanding debt on their balance sheet.

Correct AnswerverifiedShow Answer

A ________ certificate provides evidence of ownership in a specific corporation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The high start-up costs of web-based businesses cause online brokers to charge higher commissions than traditional brokerage firms.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Similar to bond investments,preferred shares can be ________,meaning the firm may buy them back.

Correct AnswerverifiedShow Answer

Mutual fund investors will note that:

Correct AnswerverifiedShow Answer

A no-load mutual fund charges no commission fees to buy or sell its shares.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Par value reflects the current market price for a stock.

Correct AnswerverifiedShow Answer

Issuing stock is considered equity financing.

Correct AnswerverifiedShow Answer

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Raising long-term capital through equity...
View Answer

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