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B |
Corporations benefit from securities markets primarily by: A. creating an efficient mechanism to invest in stocks and bonds. B. obtaining the capital they need to finance their operations. C. securing memberships on various stock exchanges. D. participating in the mutual funds of investment bankers. |
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A |
Private investors benefit from securities markets primarily by: A. having a place to buy and sell stocks and bonds. B. obtaining the capital they need to finance their operations. C. securing memberships on various stock exchanges. D. participating in the primary markets of investment bankers. |
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B |
Investment bankers ________ new issues of bonds or stocks by purchasing, at a discount, the entire stock or bond issue of a firm and selling the issue to interested investors at a higher price. A. syndicate B. underwrite C. guarantee D. sanction |
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C |
Most businesses prefer to meet their long-term financial needs through: A. debt financing. B. capital from the sale of stock. C. retained earnings. D. capital from the sale of bonds. |
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C |
Peak Performance Sporting Goods, Inc., needs a large amount of funds to expand its operation and open new stores. Jackson is one of a team of finance professionals that is working on Peak Performance’s initial public offering. Peak Performance will partner with an investment banker to assist in pricing and selling several million original issue shares of company stock. Jackson just received word that the investment bank is willing to _____________ the issue. This means the investment bank will purchase the entire issue at a discount, and sell it for full price to interested investors. A. capitalize B. materialize C. underwrite D. revitalize |
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A |
Which of the following securities provides the owner the right to vote for the corporate board of directors? A. Common stock B. Bonds C. Preferred stock D. Callable bonds |
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B |
When investors purchase ________ stock, they receive a priority claim in the payment of dividends, as well as assets, if the business is liquidated. However, these investors do not have voting rights. A. common B. preferred C. secured D. debenture |
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D |
Investors in ________ preferred stock receive a guarantee that missed dividends will accumulate and potentially be paid later. A. participating B. superior C. convertible D. cumulative |
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B |
Each share of common stock provides the investor with a ________ right that offers the investor the first right to purchase any new shares of common stock the firm decides to issue. This allows common stockholders to maintain a proportional share of ownership in the company. A. participating B. preemptive C. cumulative D. convertible |
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C |
Another name for the fixed rate of interest attached to a bond is the: A. Yield to maturity. B. Dividend. C. Coupon rate. D. Security rate. |
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B |
A Bond’s face value is the same as its: A. risk rating. B. principal. C. coupon value. D. yield. |
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D |
Which of the following accurately describes an advantage of selling bonds to raise long-term capital? A. Interest is a legal obligation. B. Face value must be repaid. C. Bondholders have voting rights. D. Interest is a tax-deductible expense |
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C |
An unsecured bond, backed only by the well-respected name of the organization, is called a _________ bond. A. mortgage B. leveraged C. debenture D. convertible |
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A |
Corporations issuing ________ bonds pledge a tangible asset as collateral to reduce the risk incurred by a bondholder. A. secured B. endorsement C. escrow D. replacement |
|
A |
Bondholders can sell their bonds: A. on the secondary market prior to the maturity date. B. early if the bonds were issued with a callable option. C. after the bonds are converted into common stock. D. after receiving the written permission of other stakeholders. |
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C |
Bonds offering a higher interest rate than other bonds of similar risk, will likely sell at a: A. secondary market. B. discount. C. premium. D. price equal to the face value of the bond |
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D |
A recent publication referred to a series of bonds as "the 6s of 25". A. This means that they were issued in 2006, and they mature in 2025. B. This means that any bond in this issue, whose series’ numbers end in "6" are callable in the year 2025. C. This means they are 25-year bonds, due on 2006. D. This means they pay 6% interest and they mature in 2025. |
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B |
. The risk associated with Firm A’s bond is greater than the risk of Firm B’s bond. All other things being equal, investors would be willing to pay ________ for Firm B’s bond. A. less B. more C. the same D. a premium |
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B |
An investment that pools together investors’ money in order to buy securities in many different companies or governments is a __________. A. commercial fund B. mutual fund C. holding company D. Public Investment Corporation |
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A |
A mutual fund company buys securities from corporations and governments, and packages them together into a "mutual fund". It then _______________. A. sells shares of this packaged investment to interested investors B. deposits the mutual fund into a pension fund for institutional investors C. charges investors a fee to find out how these investments fared, so that investors can decide for themselves as to whether they want to own the investments D. gives investors the option to bid on a share of this investment |
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