QUESTION Traders on the floor of the American Stock Exchange sell securities for what types of businesses and based on what value? A) large, established U.S. companies; market value B) midsized growth companies; par value C) prominent high-tech firms; book value D) midsized growth companies; market value E) large, established U.S. companies; book value […]
QUESTION Marshall wants to earn a regular income from stock investments to supplement his salary. Which of the following should he focus on in his research before buying any stocks? A) book value B) dividends C) stock splits D) par value E) market value ANSWER Answer: B Explanation: B) Dividends are part of a […]
QUESTION Urvashi owns 10 shares of Kloud Komputing stock, with a market value of $500 per share. The company issues a 2-for-1 stock split. After the split, what is the total value of Urvashi’s stake in Kloud Komputing? A) $10,000 B) $2,500 C) $5,000 D) $1,000 E) $20,000 ANSWER Answer: C Explanation: C) In […]
QUESTION A biotech company is planning to build a new manufacturing plant. The board is weighing the advantages and disadvantages of going public and issuing stock to raise funds. Which of the following does NOT describe a factor of this stock issue? A) The company avoids incurring additional debt by issuing stock. B) The company […]
QUESTION What do the Standard & Poor’s and Moody’s bond ratings provide an assessment of? A) book value B) risk C) dividends D) convertibility E) SEC compliance ANSWER Answer: B Explanation: B) Standard & Poor’s and Moody’s, the two principal rating services, issue bond ratings that reflect the issuer’s potential to default. A high […]
QUESTION All bonds have a maturity date at which the issuer must pay them off. What type of bond has two pay-off dates? A) sinking-fund bond B) serial bond C) prerefunded bond D) callable bond E) convertible bond ANSWER Answer: D Explanation: D) Issuers of callable bonds may specify a date before the full […]
QUESTION Mutual funds offer the opportunity for greater diversity of investment, so they present very little risk to clients. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Mutual funds include a diverse array of stocks, bonds, and other securities; however, they may focus on a particular industry sector or investment […]
QUESTION Which of the following terms does NOT reflect a method to retire bonds? A) convertible bonds B) revenue bonds C) sinking-fund bonds D) callable bonds E) serial bonds ANSWER Answer: B Explanation: B) Convertible, sinking-fund, callable, and serial are all ways of paying off, or retiring, bonds. Revenue bonds are a type of […]
QUESTION What is the term for an investment bank’s practice of buying new issues of corporate securities and selling them to the public? A) syndication B) underwriting C) initial public offering D) auctioning E) institutional investing ANSWER Answer: B Explanation: B) The activity of buying new issues of stocks or bonds from issuing corporations […]
QUESTION The Massive Steel Corporation issued bonds to finance upgrades to its aging plants. The upgrades are costly, and the bond issue is a substantial amount. To ensure its ability to pay the bonds on maturity, Massive Steel makes annual payments to a dedicated fund. What type of bonds did the company issue? A) convertible […]
