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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 21

Multiple Choice

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Elaine plans to purchase 100 shares of Michigan International stock at $44 per share.The current margin rate is 40%.The maximum amount that Elaine could borrow from her broker is:

A) $1,100.
B) $1,760.
C) $2,640.
D) $4,400.

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

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Question 22

Multiple Choice

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Before the announcement of a three-for-one stock split,the selling price for a share of stock in Olympia Oil Refineries was $150 per share.Immediately after the stock split,the probable price per share is:

A) $450.
B) $50.
C) $350.
D) $150.

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

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Question 23

Multiple Choice

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The Dow Jones Industrial Average represents the average price of ________ industrial stocks.

As indicated in the Thinking Green box in Chapter 19,investors interested in sustainability and the betterment of the natural environment,and the concept of "going green",can invest in:

When you place a limit order,it means you are willing to buy or sell the stock at the best price available.

Many stock market analysts suggest that program trading was a big cause of the stock market crash of 1987.

Stock certificates represent evidence of ownership in an organization.A stock certificate contains which of the following?

Which of the following lists the securities of the greatest number of firms?

The prospectus is summarization of the results of detailed financial documents that a firm files with the SEC prior to being given approval to issue securities.

If a stock's closing price for the day is 32.47,the stock's price in U.S.dollars would be:

A recent publication referred to a series of bonds as "the 6s of 25".

The maturity date represents the date on which a corporation must pay investors the principal (face value)of their bond.

_________ represent a powerful force in the buying and selling of corporate securities.

Corporate management decisions are influenced by the desire to keep stockholders happy.

Mini-Case Penny Stock is the chairperson of Pirate Recording Company Inc.She is the person responsible for the tremendous growth this company has enjoyed over the past three years.It was Penny's intuition and clever negotiating that enabled the company to sign two very hot recording artists: Half a Dollar and N'elli.These groups have generated profits of over $25 million. The future looks even brighter at the firm because several current and aspiring entertainers have indicated an interest in signing on with Pirate Recording.This incredible growth has delighted everyone at the company,but it has also created a major problem for Penny.Pirate Recording has never been a major player in the recording industry,primarily because of limited capital.In order to take the company to the next level Penny realizes that she will need to expand the firm's personnel and equipment.The amount of new funds required to finance this needed expansion is $150 million.Penny has started to consult with others about how to finance this major expansion of the company. -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 ____________.

After retirement,Hector began a search for a low-risk investment.He should consider buying a secured bond of a major corporation.

________ involve(s) computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.

Having just returned from serving with the U.S.Marines in Afghanistan,Alejandro has managed to save most of his earnings.He has enrolled in the local community college and he is living in his parent's lower level while he assimilates back into U.S.life.As his business major friend,he has come to you for advice.He would like to see his $40,000 savings grow,yet he knows that he will need it in about five years when he and his girlfriend are out of school and make plans to get married.He also worries that his car may break down and he will need to invest in another used car.Which of the following would you suggest for Alejandro?

Preferred stockholders have voting rights privileges not shared by common stockholders.

Paula's Pasta Paradise plans to offer their first stock sale to the general public.Prior to selling their stock,the firm must: