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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 81

Multiple Choice

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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.

A) market
B) limit
C) margin
D) split

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

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Question 82

Multiple Choice

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Daily reporting of the Dow Jones Industrial Average serves to:

A) show the direction of the market over time.
B) distort short-term fluctuations for the financial community.
C) identify the beginning of a recession in the economy.
D) disclose the average price of a share of stock on the major exchanges.

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

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Question 83

Multiple Choice

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Reviewing the stock market performance between 2000 and 2002 reveals a:

Dividends on preferred stock are:

Issuing bonds to obtain long-term funds legally compels a firm to pay regular ________ payments and repay the ________ at the maturity date.

During Ben's lunch break,he logged on to his computer to find the mutual fund he wanted to buy.As he made his way around several websites,he realized that the NAV (net asset value) quoted was yesterday's close.His shares would be purchased tomorrow,with today's closing price.Looking over his shoulder,one of his coworkers suggested that he look into _________ because they are similar to mutual funds,but could be traded during the entire trading day,just like stocks.

Purchasing stock from a foreign company whose home nation has an unstable currency or government is a relatively safe investment because you are not exchanging currency,you are exchanging stock.

A mutual fund pools investors' money and then buys stocks and bonds in many companies in accordance with the purpose of the fund.

When investing in mutual funds,the investor will buy shares of a fund that consists of stocks or bonds,the fund will hold shares of many companies.

Which of the following represents a disadvantage of issuing bonds?

Andrew invested in a new issue corporate bond on the primary market for $1,000,with a coupon rate of 5%,and a maturity date of 2020.The bond was held in his brokerage account electronically,so he did not think about it on a daily basis.On 2012,he thought about selling the bond on the secondary market to help pay for his school tuition.At that time,interest rates had climbed to 6.5%.This was great news for Andrew because now he could sell his bond for more than the principal amount he would receive in 2020.

Abraham found a $1000 face value bond that belonged to his father.He checked the Wall Street Journal and found the bond was currently selling for $1220.This bond sells at a:

Bonds sold at a discount are sold for more than the bond's face value.

The interest rate paid to bondholders is sometimes called the coupon rate.

Before a corporation's stock can be sold on a major stock exchange,the firm must provide detailed financial information to the Securities and Exchange Commission.

The interest rate on a AAA rated government treasury bond is 3.5%.A secured corporate bond is likely to pay:

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

The Making Ethical Decisions box,titled,"Wagging the Dog" asks students to consider an ethical dilemma a company executive may face.The dilemma is:

Bond prices in the newspaper or online are quoted as a percentage of their face value of $1000.If the bond price is 103.25,this bond's value =

Many observers suggest that the stock market is dominated by the buying and selling activities of institutional investors.