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
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 […]
Date: September 3rd, 2020
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.
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
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.
Date: September 3rd, 2020
