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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 161

True/False

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

A) True
B) False

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Question 162

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A(n) ________ represents a condensed version of the registration statement that enables prospective investors to evaluate a stock for possible purchase.

A) insider report
B) securities disclosure
C) evaluative report
D) prospectus

E) B) and D)
F) B) and C)

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Question 163

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The primary market allows an investor to purchase financial securities from other investors.

If the firm should find itself in bankruptcy,preferred stockholders would have claim to the value of any remaining assets before common stockholders.

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

A stock split refers to buying a share of stock at a discounted price if full payment is made at the time of purchase.

Which of the following securities guarantees preferred stockholders payment of missed dividends before any dividends are paid to common stockholders?

As market interest rates increase,the selling price for existing bonds also increases.

Trading curbs motivate traders to utilize their computerized programs to reduce market volatility.

When an investor sells a security for more than the purchase price,the investor earns a(n) :

A round lot refers to the purchase of 100 shares of stock in the same company in a single transaction.

A bull market occurs when overall stock prices increase.

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

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

The Dow Jones Industrial Average reflects the average of the eleven largest corporations traded on the New York Stock Exchange as originally selected by Charles Dow.

The initial cost of investing in mutual funds depends in part on:

The new issue $1,000 face value bonds due in 2020 issued by Bay Books,Ltd.are perceived by investors as being less attractive than other bonds offered by other businesses at the same time.The coupon rate attached to these bonds will need to be __________ than other corporate bond issues in order to attract investors.

Yesterday,Alberto purchased on margin 100 shares of stock in the ABC Corporation for $40 per share.Today,the price of the shares dropped by $10 per share.Alberto expects his broker to issue a margin call.

The investor always pays a fee when purchasing a share of a mutual fund.

Greg purchased 2000 shares of common stock of the Rite Track Corporation last year.He learned several months later that the stock does not pay a dividend.Greg should proceed to: