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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 31

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Erin invested part of her savings in 15-year Bellandro Bay Brewery bonds paying 6% interest annually,with a maturity date of 2020.The bonds' call provision was 2012.If interest rates go down to 4.5% in the year 2012,Bellandro Bay is not likely to call in this bond issue.

A) True
B) False

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Question 32

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Which of these represents a special feature included with some bond issues?

A) No repayment of par value
B) No obligation to pay dividends
C) No increase in the firm's debt level
D) Convertibility of a debt security (bond) into an equity security (stock)

E) A) and C)
F) All of the above

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Question 33

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The Reaching Beyond Our Borders box in Chapter 19 provides the following advice when trading in foreign stocks?

Rob Laws worked for several years for an aerospace manufacturer.For years he had purchased stock through his company's 401-K retirement fund.Now,upon retirement he was ready to transfer his retirement account to a financial services company and diversify the "nest egg" that currently totaled about $600,000 into more conservative investments.As a long time advocate of all things "green",he cautiously scrutinized every mutual fund that his broker suggested to make certain that it did not contain companies that left too large a carbon footprint.According to the Thinking Green box in Chapter 19,Rob is like a growing number of investors who may prefer SRIs (Socially Responsible Investments).

Previous Close.Which of these will provide her with an indication of the present price per share she can expect to realize if she calls her broker tomorrow morning and asks her to sell the shares?

When issuing stock to obtain long-term funding,dividend payments are:

Preemptive rights provide common stockholders the first right to purchase any new shares of common stock issued by the firm.

One criticism of the Dow Jones Industrial Average suggests that it:

Ellie owns stock in Rotary Technologies.Her stock provides a priority claim on dividend payments and on the firm's assets in the event of liquidation.However,her ________ stock ownership does not offer her voting rights.

The Securities and Exchange Commission developed ________ to halt trading in the stock market for a short time when the market has experienced a dramatic decrease in prices.

An investment that pools together investors' money in order to buy securities in many different companies or governments is a ___________.

The market price of a share of common stock depends heavily on:

Standard and Poor's and Moody's are well-known companies that rate bonds.

Chipper's Golf Resort has learned that Tiger Woods is interested in putting his name on golf course designs;however,in order for any golf course to be acceptable to him,it will cost a minimum of $20 million to build.Chipper's owners want an international presence,and they believe that,"just the way golf club companies became publicly traded corporations,it may be time for golf courses to do the same." The plan is to begin to purchase real estate for four new golf resorts.Proceeding with their venture,the owners have calculated that they will need approximately $100 million.But putting together an IPO is another matter.After meeting with their investment banker,they believe that investors will be willing to pay $16/share for the IPO.As the ___________ for this issue,the investment bank requires 3% of the revenues generated by the sale.Chipper's will need to issue _______ shares in order to have the $100 million they need to proceed with their plan.

_____________ have a set dollar goal the fund manager wants to manage.Once the fund has reached that goal,it does not accept new investors.

Wyoming Mining Corporation makes regular monetary deposits that will accumulate and provide for an orderly retirement of their bonds when they come due in 2015.Wyoming Mining appears to be utilizing a:

Which of the following terms best describes the relationship between the New York Stock Exchange and the NASDAQ?

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

As interest rates increase,bond prices fall.

Dividends are paid out of a corporation's: