QUESTION The market for stocks progresses through a series of steps. Which step comes last in the process? A) Investment banks buy stocks. B) Corporations issue stocks. C) Investment banks form a syndicate. D) Investors sell stocks on an exchange. E) Investment banks sell stocks. ANSWER Answer: D Explanation: D) After investment banks sell […]
QUESTION Marco bought 100 shares of Xtreem Energy Drink stock at $75 per share. One year later the stock price is $87, and Marco is content to watch his investment grow. Which of the following statements is true? A) Marco has earned a capital gain of $1,200. B) Marco has earned a capital gain of […]
QUESTION Which of the following is sold to investors at weekly auctions? A) initial public offering stock issues B) long-term U.S. Treasury securities C) secondary securities D) short-term U.S. Treasury securities E) institutional investor stocks ANSWER Answer: D Explanation: D) Most securities sold through open auction are U.S. Treasury securities. Short-term securities are auctioned […]
QUESTION Which of the following is NOT true of money market instruments? A) They are easily converted into cash. B) They are long-term investments. C) They are considered a very low-risk investment. D) They offer investors very low returns. E) They are conservative investments. ANSWER Answer: B Explanation: B) Money market instruments are debt […]
QUESTION Placing a limit order with a broker is a good strategy for a volatile day of trading in the stock market. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Limit orders tell a broker to buy a particular security only below a certain price or to sell only above […]
QUESTION Owners of preferred stock in a company get first claim to its dividends and assets but are not allowed to vote on major company decisions. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Preferred stock owners cannot vote on company decisions but do get preferred, or first, claim on […]
QUESTION Aardvark needs some quickly obtainable funds to pay some overdue bills. It is considering using factoring–obtaining cash in exchange for outstanding accounts receivable funds. Which of the following, if true, strengthens the case for using factoring? A) Factoring can be a costly way to obtain ready cash. B) Aardvark would not have to liquidate […]
QUESTION The issuer of callable bonds may call in the bonds at any time during their lifespan, usually when market conditions are favorable for the issuer. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Call provisions for callable bonds must be specified when the bonds are issued.
QUESTION The statements above most strongly suggest that if all subprime loan borrowers had taken out the loan that was most appropriate for their needs, then what would follow? A) None of them would have taken out an adjustable loan. B) None of them would have taken out a subprime loan. C) Most of them […]
QUESTION The NASDAQ Composite Index only tracks the stocks of U.S. technology companies. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The NASDAQ Composite Index tracks domestic and foreign stocks listed on the NASDAQ exchange. Many companies on the NASDAQ are in the high-technology sector.
