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Study Resources (Business Management)

  121.Online investors expect more expert advice than investors using traditional brokerage firms. 122.Young investors place more importance on low risk investments, while elderly investors prefer significant growth in the value of their investments. 123.Diversification means buying several different types of investments with the funds you have available for investment. 124.For starters, investors should.
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True / False Questions  1.Economic growth and the creation of jobs depend on the availability of money. 2.Most countries restrict the flow of money in and out of their borders. 3.Economic events in other nations seldom impact the powerful U.S. economy. 4.Barter is the trading of goods and services for other goods and services. 5.Barter.
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  171.Bonds sold at a discount are sold for more than the bond's face value. 172.As interest rates increase, bond prices fall. 173.From an investor's viewpoint, bonds generally provide a safer investment option than does the stock of the same corporation. 174.A U.S. government bond paying 3.25% interest annually is a lower risk than.
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  21.The U.S. production of the Sacagawea dollar coins provides greater durability than paper dollar bills. 22.The people living on the island nation of Wacki-ki readily accept a certain type of seashell as payment for the goods and services they trade. For Wackians (the name of Wacki-ki natives), seashells serve as money. 23.When.
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  21.Institutional investors include insurance companies, individual investors, and mutual funds. 22.Corporations receive needed funds when they sell a new issuance of a security in the primary market. 23.Investors who trade securities, buy securities they are interested in holding or sell securities to make a profit or cut losses by trading in the.
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  181.As market interest rates increase, the selling price for existing bonds also increases. 182.A mutual fund pools investors' money and then buys stocks and bonds in many companies in accordance with the purpose of the fund. 183.A mutual fund's purpose is rapid investment growth not to provide diversification for investors. 184.When investing in.
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  251.Paula's Pasta Paradise plans to offer their first stock sale to the general public. Prior to selling their stock, the firm must: A. pay dividends to the existing stockholders.B. register its stock offering with the SEC.C. establish an initial selling price that cannot exceed $25 per share.D. determine the brokers that will initially trade their.
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  201.Every time someone sells a stock believing the price has reached its maximum, someone else buys it believing the price will go still higher. 202.The Dow Jones Industrial Average reflects the daily average price of all the stocks traded on the New York Stock Exchange. 203.The Dow Jones Industrial Average utilizes the.
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  401.Gerald, a recent graduate of a community college, is about to make his first investment in the stock market. Which of the following would be a cautious way for Gerald to start investing? A. Future contracts in oilB. Index fundsC. Short-selling technology stocksD. Commodity market transactions in precious metals 402.Six years ago, Angie invested $50,000 that.
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  331.The market price of a share of common stock depends heavily on: A. the number of stocks traded on the New York Stock Exchange.B. the default rate on U.S. government bonds.C. the overall performance of the company.D. the relative value of the U.S. dollar compared to the euro. 332.When an investor sells a security for more.
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  151.Corporations and brokers prefer to have stock purchases conducted in round lots of 100 shares. 152.A stock split refers to buying a share of stock at a discounted price if full payment is made at the time of purchase. 153.A round lot refers to the purchase of 100 shares of stock in.
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  231.Molly Manufacturing plans to issue $75 million of common stock. The firm will likely rely on the advice and assistance of a(n): A. Federal Reserve bank.B. commercial bank.C. mutual fund.D. investment banker. 232.Shareholder Jones sells 100 shares of Very Vegetarian Corporation stock to Investor Smith. This transaction takes place in the: A. primary market.B. secondary market.C. initial offerings market.D. security resale.
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  41.The reserve requirement represents the Fed's most powerful tool for conducting monetary policy. 42.When the Fed increases the reserve requirement, banks make fewer loans. 43.When the Federal Reserve wants to increase the money supply, they decrease the reserve requirement. 44.When the Federal Reserve acts to reduce inflation, they decrease the reserve requirement. 45.The Fed.
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  241.An organization whose members can buy and sell securities for companies and investors is known as a: A. public securities dealer.B. securities facilitator.C. transfer medium.D. stock exchange. 242.A company's stock does not have to be listed on one of the major stock exchanges in order to trade. It can be traded on _____________. A. Over-the-counter marketB. NYSE EuronextC. NASDAQD. AMEX 243.If a.
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  71.Cumulative preferred stockholders enjoy the first right to purchase any new shares of stock issued by the firm. 72.Cumulative preferred stockholders enjoy a promise that missed dividends will accumulate and be paid later, before any dividends are paid to common stockholders. 73.Both preferred stocks and bonds represent funding sources that require repayment.
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  291.An unsecured bond, backed only by the well-respected name of the organization, is called a________ bond. A. mortgageB. leveragedC. debentureD. convertible 292.Corporations issuing ________ bonds pledge a tangible asset as collateral to reduce the risk incurred by a bondholder. A. securedB. endorsementC. escrowD. replacement 293.Firms establish a ________ so that sufficient funds are available to repay bondholders on the maturity date. A. mutual fundB. sinking.
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  301.A convertible bond allows the bondholder to exchange the bond for: A. preferred stock.B. common stock.C. collateral.D. debt holder privileges. 302.Seattle Music, Inc. recently offered bonds for sale to the public. The unsecured corporate bond paid interest of 9% to investors for the twenty-year life of the bonds. Seattle Music is obligated to: A. Represent each bondholder as.
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  161.Ken owns 100 shares in XYZ Company, currently selling for $60 per share. His stock split yesterday 3-for-1. The number of shares that Ken owns has tripled. 162.Yesterday, Alberto purchased on margin 100 shares of stock in the ABC Corporation for $40 per share. Today, the price of the shares dropped.
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  11.Electronic cash is the newest form of money. 12.Historically, coins and paper money complicated the exchange process. 13.The U.S. government has done its best to create dollar bills that are easily duplicated. 14.Companies are now developing ways to send money across national boundaries using e-cash. 15.The President of the U.S. is in control of.
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  391.Buying several different investment alternatives to spread the risk helps an investor achieve: A. lower rates of return.B. lower commission fees.C. isolation.D. diversification. 392.____________ means that the mutual fund company does not show a fee or commission for investing in the fund. A. Front loadB. Back loadC. Double loadD. No load 393._____________ have a set dollar goal the fund manager wants to.
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  191.A no-load mutual fund charges no commission fees to buy or sell its shares. 192.When comparing the investments of different mutual funds, little variation in the risk level exists. 193.Index funds invest in one specific type of investment, for example, an index fund might only invest in income stocks, companies whose stocks.
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  381.Abraham found a $1000 face value bond that belonged to his father. He checked the Wall Street Journal and found the bond was currently selling for $1220. This bond sells at a: A. discount.B. premium.C. price that is overvalued.D. primary market. 382.The risk associated with Firm A's bond is greater than the risk of Firm B's.
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  61.Newspapers in the nation of St. Lunatic report a significant increase in money supply during the past few months. This information indicates that St. Lunatic may experience a serious recession in the near future. 62.The government is concerned about inflationary pressures that seem to be building within the nation. Restricting the.
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  271.Which of the following securities guarantees preferred stockholders payment of missed dividends before any dividends are paid to common stockholders? A. Call provisionB. Cumulative preferredC. Participating preferredD. Convertible preferred 272.Mark impresses his friends by stating that he just cast four votes in the election of the board of directors of Microsoft, indicating that Mark owns __________.
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  311.The interest rate on a AAA rated government treasury bond is 3.5%. A secured corporate bond is likely to pay: A. The same as the treasury bond.B. Less than the treasury bond.C. More than the treasury bond.D. The same as the treasury bond, but with a shorter maturity date. 312.Juan recently invested in 15-year Bellandro Bay.
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  41.The Federal Trade Commission (FTC) regulates the security markets in the United States. 42.Before a corporation's stock can be sold on a major stock exchange, the firm must provide detailed financial information to the Securities and Exchange Commission. 43.Insider trading involves the sale of stock to employees at discounted prices. 44.The Securities and.
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  211.The largest one-day drop in the stock market occurred in 1987 - a 22% drop. 212.Changes in investor trust and confidence strongly influence stock market prices. 213.The Dow Jones Industrial Average reflects the average of the eleven largest corporations traded on the New York Stock Exchange as originally selected by Charles Dow. 214.One.
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  361.Dan wanted to start investing some of his monthly earnings in stocks.  He planned to diversify his holdings between blue chips, growth, and income type stocks.  After consulting with a financial planner, he now understands the difference between these three types.  The difference is: A. Blue chips are the greatest gamble.  They.
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  351.The stock of well-known, high quality firms, such as Coca-Cola, General Electric, and Procter & Gamble, fit the characteristics of ________ stocks, because investors can almost always be assured a dividend and consistent stock price appreciation. A. growthB. blue chipC. incomeD. callable 352.Corporations that want to attract more investors by lowering the selling price of their.
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  321.Another term for portfolio strategy is: A. modulation modelB. formula modelC. allocation modelD. equity model 322.When an investor purchases a security, the investor does so with the expectation of: A. maintaining his or her capital position.B. minimizing risk.C. making a profit.D. providing commissions. 323.On-line trading services target those investors who: A. require the research and advice of a licensed stockbroker.B. are interested in purchasing government.
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  221.The trading of previously issued securities from one investor to another takes place in the: A. primary market.B. secondary market.C. initial offerings market.D. corporate trading market. 222.When retained earnings are not enough to meet their long-term funding needs, businesses may be able to raise funds by: A. selling common stock.B. petitioning the government for a loan.C. purchasing additional assets.D. decreasing their.
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  51.With recent mergers of stock exchanges, beginning with the New York Stock Exchange merger with Archipilago, and subsequently with Euronext and then Deutsche Borse, most exchange floors are symbolic because trades usually take place via computers. 52.If you want to buy the stocks of largely capitalized companies (companies with millions, and even.
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  341.Brokers prefer trading shares of a firm's stock in multiples of 100, known as: A. margin blocks.B. odd lots.C. round lots.D. market lots. 342.When corporations elect to issue two or more shares of stock to existing stockholders for each share they currently own, they have initiated a(n) _________. A. stock splitB. dividend spreadC. share dividendD. earnings split 343.Which of the following describes.
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  11.Issuing bonds is considered debt financing. 12.It is easier for a small business to raise funds through a stock issuance than for a large, well-known company. 13.Before issuing stock or bonds, corporations must meet the disclosure requirements of the Federal Trade Commission (FTC). 14.An investment banking firm assists corporations in selling the new.
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  261.___________ are the firm's after tax profits that are distributed to stockholders. A. Equity capitalB. Interest paymentsC. DividendsD. Retained earnings 262.The dollar amount assigned to shares of stock by the corporation's charter represents the stock's: A. net asset value.B. legal value.C. market value.D. par value. 263.When investors purchase ________ stock, they receive a priority claim in the payment of dividends, as well.
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  61.When a corporation enjoys a profitable year, dividends must be paid. 62.Issuing new common stock usually expands ownership, giving all owners the right to vote for the firm's board of directors. 63.Issuing new stock increases the firm's outstanding debt on their balance sheet. 64.If paid, dividends come from any profits remaining after the.
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  419.The risk/return trade-off is inherent in any investment strategy. What are the five key criteria investors should consider when selecting investment options? 420.Describe four different types of common stock that an investor may consider, depending upon the investor's strategy and risk tolerance. Multiple Choice Questions  Mini-CasePenny Stock is the chairperson of Pirate Recording.
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  101.Firms are at a disadvantage when issuing bonds because the interest rate that they must pay to bondholders is not tax deductible. 102.As creditors of a firm, bondholders enjoy voting privileges for the firm's board of directors' elections. 103.Both stocks and bonds represent temporary sources of funding for a firm. Eventually they.
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  51.The goal of Federal Reserve monetary policy is to affect the level of competition in the U.S. banking system. 52.When the value of the euro increases compared to the U.S. dollar, the price of U.S. exports to Europe will decrease. 53.If you are trying to sell your state-of-the-art bicycles into the Japanese.
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  371.Which of the following organizations provides an assessment of the relative level of risk of a particular firm's bond issue? A. The Securities and Exchange CommissionB. E*tradeC. The Wall Street JournalD. Standard & Poor's 372.Bonds sold at a ________, sell for less than face value. A. secondary marketB. discountC. premiumD. date before the maturity date 373.Bonds offering a higher interest rate than.
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  111.A bond sold with a sinking fund provision requires the firm to allow a stockholder to exchange his/her bond for a specified number of shares of common stock. 112.A company often exercises the call provision of a bond if it's available when prevailing interest rates fall below the interest rate currently.
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  81.Zach purchased 200 shares of Fast Track Corporation last year. This year, he plans to hire an attorney to go after the company for failure to pay dividends. If Zach follows through with his plan, he will probably win the lawsuit because companies are obligated to pay their stockholders dividends.
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  31.Inflation occurs in an economy with too little money chasing too many goods. 32.Changes in the money supply produce little or no change in inflation, employment and economic growth. 33.When the value of the dollar falls, foreign goods become less expensive for American consumers. 34.The strength of the U.S. dollar depends on the.
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