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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 71

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Every time someone sells a stock believing the price has reached its maximum,someone else buys it believing the price will go still higher.

A) True
B) False

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Question 72

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If investor Jones buys a share of stock in the ABC Corporation from investor Smith,the ABC Corporation automatically receives a fixed percentage of the selling price.

A) True
B) False

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Question 73

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The Dow Jones Industrial Average reflects the daily average price of all the stocks traded on the New York Stock Exchange.

Investors who trade securities,buy securities they are interested in holding or sell securities to make a profit or cut losses by trading in the secondary market.

___________ are the firm's after tax profits that are distributed to stockholders.

To reduce the risk of investing in an individual stock,an ownership position in many different companies can be achieved by purchasing shares in an) :

Which of the following is not an important criterion to consider before investing?

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

A share of preferred stock currently sells for $120.It offers the investor a dividend rate of 8%,on a par value of $100.If the investor owns 500 shares,her total annual dividend will equal:

A well-diversified portfolio would consist of a variety of investments and even cash for emergencies.The important thing is that the choice of investments spreads the risk.Some investments may perform very well in any one year while others may lag.Those performing well will balance out those that are underperforming.

An unsecured bond,backed only by the well-respected name of the organization,is called a________ bond.

Roberto directed his broker to buy 75 shares of New Mexico Technologies at the best possible price available that day.These directions indicate that Roberto placed a ________ order with his broker.

On a mutual fund quotation,the Net Asset Value NAV)= the number of persons who are investing in the fund.

The NASDAQ reports its own average that investors follow to observe trends in the market.

Idle Time Gaming,Inc. ,has reached a point in its life where it needs several million dollars in order to expand and become the international company that it says it wants to be in its strategic plan.After consulting with an investment banker who is willing to underwrite the issue,it learned that investors will purchase the stock for $22/share.Idle time will receive a smaller amount for each share that is sold.

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.

If Pirate Recording elects to offer an IPO Initial Public Offering) ,it will involve preparing full financial disclosure with the ___________.The firm is advised to solicit the services of an investment banker/underwriter,who will analyze the market and determine the best price for the new issue of Pirate Recording stock.The offering will then be sold on the ____________.

Which of the following organizations provides an assessment of the relative level of risk of a particular firm's bond issue?

The proceeds from a secondary market sale of securities go to the corporation whose security is being traded.

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