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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 101

Multiple Choice

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Ashleigh is looking for an investment that will pay a little better than what she can get from a government bond.You suggest that she consider a new issue of debenture bonds by Very Vegetarian that pay 8.5% annually and mature in 2025.A debenture bond:

A) will provide her with added security because it is backed by collateral.
B) is legally not callable,so she will not have to worry about having to look for another investment any time soon.
C) pays the holder interest only one time each year.
D) is an unsecured corporate bond that pays a higher interest rate because the investor is taking more risk.

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

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Question 102

Multiple Choice

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An organization whose members can buy and sell securities for companies and investors is known as a:

A) public securities dealer.
B) securities facilitator.
C) transfer medium.
D) stock exchange.

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

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Question 103

Multiple Choice

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When reading mutual fund quotations,the ________ is the price per share.

Describe four different types of common stock that an investor may consider,depending upon the investor's strategy and risk tolerance.

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

The Securities and Exchange Commission requires that all prospective investors receive a copy of a firm's prospectus prior to investing.

Bondholders can sell their bonds:

When Tong Su purchased 500 shares of preferred stock in the Vibrates Corporation,his certificate indicated the stock had a par value of $50 per share.This means that Tong Su:

Long-term funds acquired through the sale of stock are not required to be repaid to the investor.

Buying stock on margin allows an investor to borrow funds from the brokerage company as part of the transaction.This __________ the potential return to the investor and ___________ the risk.

Demetrius recently bought a bond with face value of $1000.He paid $1,150 for the bond.Demetrius' bond investment undoubtedly pays a higher interest rate than the going rate for similar bonds currently out on the market.

The cost of a firm borrowing money is called the:

The NYSE purchased Archipelago Holdings,Inc. ,in order to move from a floor-based exchange system to an electronic trading system.

Insider trading involves the sale of stock to employees at discounted prices.

The interest earned on municipal bonds is often tax-free at the state level.

Securities and Exchange Commission (SEC)rules prohibit the listing of the stock of foreign firms on U.S.stock exchanges.

Insider trading refers to someone who benefits unfairly from information about a security not available to the general public.

Debenture bonds represent bonds that are not secured by collateral.

Raul and his grandfather receive individualized investment advice from the same chartered financial analyst.When comparing their customized investment recommendations,it is likely that Raul's strategy targets lower risk investment options than the advice received by his grandfather.

According to the Thinking Green box,titled,"Invest with Integrity",socially responsible investment funds (SRIs)managed to prosper and grow through the recession and credit crisis of 2008.