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Exam 19: Using Securities Markets for Financing and Investing Opportunities

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Question 51

True/False

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Bonds represent a permanent source of funding for companies.The money firms acquire by issuing bonds does not need to be repaid.

A) True
B) False

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Question 52

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New investors may want to consider _______ funds,which are mutual funds that invest in one particular kind of stock or a particular kind of bond,or even stocks that are representative of the entire market.

A) international
B) index
C) global
D) relief

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

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Question 53

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Hottie Potatee,Inc.wants to raise an undisclosed amount of funds in order to expand the company-owned potato bar stores overseas.The CFO Chief Financial Officer)of the company will negotiate with an expert at the FTC Federal Trade Commission)who will underwrite the issue of stock that Hottie Potatee plans to offer.

Tyrone owns shares of ________ stock in New Jersey Power.His stock certificate states that any missed dividends will be paid prior to any future common stock dividend payments.

An) ________ represents a condensed version of the registration statement that enables prospective investors to evaluate a stock for possible purchase.

Maureen owns 20% of the common stock of the Queen Bean Corporation.The company announced plans to offer an additional 10,000 shares of common stock for sale.If Maureen exercises her preemptive rights,Queen Bean must offer her the opportunity to purchase:

In an effort to profit from stock market trading,Chad landed a job with the ABC Corporation.Chad intends to use his position to obtain privileged information about his new employer that would not be available to the public.While Chad realizes that he may be benefiting unfairly,as an employee he is not acting illegally.

Young investors place more importance on low risk investments,while elderly investors prefer significant growth in the value of their investments.

The Federal Trade Commission FTC)regulates the security markets in the United States.

Lamont bought a share of stock in the ABC Corporation for $50.When he sold the stock later that year,he received $70.The par value of the stock is $5.Lamont's capital gain is $25.

Six years ago,Angie invested $50,000 that she inherited from her grandfather into a growth stock mutual fund.Each share of the fund cost $22/share.Yesterday,she perused a mutual fund quote on the Internet.The quotation showed 1) Year To Date Return;2) Yield;3) Net Asset Value;4) 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?

The Securities and Exchange Commission has accused Martha of benefiting unfairly from information secured from a corporate officer of Stewart Engineering.Because Martha used that information to profit in the stock market,she faces ________ charges.

Realizing that Mississippi Industries stock currently sells for $35 a share,Juanita directed her broker to buy 100 shares if and when the price dropped to $33.Juanita placed a ________ order with her broker.

Investing in common stock can give an individual the opportunity to participate in the success or failure of a corporation.

When corporations elect to issue two or more shares of stock to existing stockholders for each share they currently own,they have initiated an) _________.

Ina Vestor has a brokerage account with one of the remaining large investment firms.This morning her broker called asking if she is interested in participating in an IPO.He went on to say that he could get her 200 shares for $23/share.If Ina agrees to buy the IPO,the trade will take place in the _____________.

Through disciplined investing,Alyssa now owns 10% or 50,000 shares of a small biotech company.Although she has enjoyed a lot of control,she realizes that in order for the firm to acquire the funds to grow in a recessionary economy,it will need to issue more stock.Her regret is that it will dilute her ownership.

Penny stocks represent a high-risk stock investment.

The Securities and Exchange Commission does not intercede in any way in the process of an IPO.Doing so would disrupt the natural process of the capital markets.

As creditors of a firm,bondholders enjoy voting privileges for the firm's board of directors' elections.