QUESTION Blue-chip stocks usually pay investors regular dividends. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Blue-chip stocks are issued by big, reputable companies and usually pay regular dividends. They can be common stock or preferred stock.
Date: September 3rd, 2020
QUESTION A town issues $15 million in bonds to pay for construction of a new high school. The bonds will mature over 20 years, but the town will begin paying off a portion of the bonds annually after 15 years. What type of bonds are being used to help finance the school construction? A) callable […]
Date: September 3rd, 2020
QUESTION An investment bank buys the first issue of stock from XYZ Company at $35 per share. As XYZ’s shares are sold on the secondary securities market, the price falls to $28 a share. Which of the following describes the outcome of this dynamic? A) The investment bank sells the shares back to XYZ Company […]
Date: September 3rd, 2020
QUESTION Which of the following is considered an institutional investor on the securities market? A) Goldman Sachs B) Charles Schwab C) E-Trade D) Liberty Mutual Insurance E) U.S. Treasury ANSWER Answer: D Explanation: D) Institutional investors are large and powerful organizations, such as pension funds and insurance companies, that invest their own or others’ […]
Date: September 3rd, 2020
QUESTION In underwriting, investment bankers buy new issues of corporate stocks and bonds and resell them to the public. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Most new issues of stocks and bonds are sold to the public through investment bankers.
Date: September 3rd, 2020
QUESTION The secondary securities market is an auction where institutional investors buy U.S. Treasury securities. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The secondary securities market is the financial market where existing stocks and bonds are bought and sold by investors. The original securities issuers are usually not involved.
Date: September 3rd, 2020
QUESTION Mortgage pass-through securities are a safe investment in difficult economic conditions. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Mortgage pass-through securities were once considered relatively safe investments. These securities were seriously impacted by the 2008 U.S. financial crisis and housing market collapse.
Date: September 3rd, 2020
QUESTION With a market order, the broker has total decision-making authority over when to buy or sell a security for a client. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: In a market order, the broker is told to buy or sell a security at the best available price. These […]
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
