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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 31

Multiple Choice

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An investor who purchases stock in a company becomes a(n)

A) creditor.
B) owner.
C) blue chip master.
D) speculator.

E) None of the above
F) C) and D)

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Question 32

Multiple Choice

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Corporations that want to attract more investors by lowering the selling price of their common stock might consider declaring a

A) bankruptcy filing.
B) cash dividend.
C) margin call.
D) stock split.

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

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Question 33

Multiple Choice

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Bond prices in the newspaper or online are quoted as a percentage of their face value of $1,000. If the bond price is 103.25, this bond's value is equal to

________ stocks represent investments in emerging fields that have the potential to realize better than average increases in the stock's prices.

When corporations elect to issue two or more shares of stock to existing stockholders for each share they currently own, they have initiated a(n)

Mutual funds offer small investors an opportunity to diversify their investments.

A bear is an investor that expects stock prices to rise.

A convertible bond allows the bondholder to exchange the bond for

After many years as a privately held corporation, Greeley Industries decided to offer stock to the general public. Greeley may discover that stockholders

A ________ certificate provides evidence of ownership in a specific corporation.

Investment bankers are in the business of underwriting securities. They profit from purchasing the new stock offering of a corporation at a discount, and then selling those shares of stock to the public at the market price.

As the chief financial officer (CFO) , you identify that your firm needs to raise additional funds by selling new shares of stock. Which of the following refers to a specialist that assists corporations in the issue and sale of new securities?

Online trading services target those investors who

When retained earnings are not enough to meet their long-term funding needs, businesses may be able to raise funds by

Orlando, a recent graduate of a community college, is about to make his first investment in the stock market. Which of the following would be a cautious way for Orlando to start investing?

The advantage of using an online broker is that these services usually provide you with a wealth of information and help you allocate your assets. Sometimes they even help you create an investment plan for life!

A no-load mutual fund charges no commission fees to buy or sell its shares.

Natalie landed her first job after from college. The same year, she also started her first investment account. Having met with several brokers before choosing someone to work with, Natalie wanted to make certain that her investment choices would provide for long-term growth, yet satisfy her concern for diversification. The person who won her business prepared an asset allocation plan that would start her account by investing in several index funds. Her advisor has offered her a sound way to combine the concern for diversification since index funds are a sensible way for Natalie to start.

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

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