Question 1

Insider trading laws prevent employees from buying or selling the securities of their employers.

Accepted Answer

A) True 
 B)False

Question 2

A blue chip stock represents a highly speculative stock investment.

Accepted Answer

A) True 
 B)False

Question 3

Penny stocks represent a high-risk stock investment.

Accepted Answer

A) True 
 B)False

Question 4

Buying several different investment alternatives to spread the risk helps an investor achieve

Accepted Answer

A)   lower rates of return.
B)   lower commission fees.
C)   isolation.
D)   diversification.

Question 5

To reduce market volatility, ________ require that a key computer is turned off so that program trading is halted.

Accepted Answer

A)   ultra restraints
B)   trading curbs
C)   market stops
D)   nutmeg halts

Question 6

A margin call requires an investor to repay money borrowed from the broker used to purchase the stock.

Accepted Answer

A) True 
 B)False

Question 7

Though Miguel relies on his stockbroker to execute his buy and sell orders for shares of stock, he has found that the process of buying or selling a share of stock on a major stock exchange normally takes

Accepted Answer

A)   weeks.
B)   seconds.
C)   days.
D)   months.

Question 8

Mutual fund investors will note that

Accepted Answer

A)   fund managers have not yet added foreign securities into their funds.
B)   mutual funds cannot be purchased through a traditional brokerage house.
C)   loads can vary from one mutual fund to another. The fund manager dictates the commissions and fees.
D)   by law, mutual funds can no longer charge loads.

Question 9

The initial cost of investing in mutual funds depends in part on

Accepted Answer

A)   whether the fund is a load or no-load fund.
B)   the risk tolerance of the companies in the fund.
C)   the tax rate on capital gains.
D)   the imposition of government tariffs.

Question 10

Which of the following offers low risk, guaranteed income, backed by the full faith and credit of the federal government?

Accepted Answer

A)   municipal bonds
B)   U.S. government preferred stocks
C)   common stock in the U.S. postal service
D)   U.S. government bonds

Question 11

A ________ is a registered representative acting as an intermediary to buy and sell securities for clients.

Accepted Answer

A)   certified stock underwriter
B)   stockbroker
C)   securities banker
D)   trading accountant

Question 12

Epic Electronics decides to pay off its bonds several years before the maturity date. Apparently, the bonds

Accepted Answer

A)   contain an early dismissal clause.
B)   have an early retirement option.
C)   are callable.
D)   have discount authorization.

Question 13

Game Guys announced a 2-for-1 common stock split for investors on record. Which of the following will occur?

Accepted Answer

A)   The stock price will increase to reflect the value of two shares for every one share.
B)   Each share will be worth ½ of its previous value, but shareholders' total value of Game Guys will remain the same.
C)   The value of Game Guys common stock will remain the same, for a short period of time, and then experience a guaranteed growth spurt.
D)   The shareholders will sell their shares immediately after the split and take their capital gains, as well as provide others an opportunity to invest in Game Guys.

Question 14

Stocks of corporations with earnings expected to increase faster than other stocks are called ________ stocks.

Accepted Answer

A)   penny
B)   growth
C)   preferred
D)   blue sky

Question 15

According to the Connecting Through Social Media box, which of the following is a way the SEC changes altered securities laws following the JOBS Act?

Accepted Answer

A)   No longer required crowdinvestors to disclose their financial information to the SEC.
B)   Required small businesses to have at least 100 employees before allowing crowdinvestors to be pursued.
C)   Allowed a maximum of 20 crowdinvesting groups to invest in projects.
D)   Allows businesses to accept crowdinvestments from both accredited and unaccredited investors.

Question 16

________ involve(s)  computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.

Accepted Answer

A)   Software action
B)   Program trading
C)   Curbs
D)   Circuit breakers

Question 17

How do investment bankers generate revenues for their firms?

Accepted Answer

A)   They invest their own funds, or the funds of others, in mutual funds and commodities.
B)   They earn commissions by managing the investments of insurance companies and mutual funds.
C)   They buy, at a discount, the entire issue of a new security and then sell the issue to investors at full price.
D)   They receive consulting revenues from the advice they offer the Securities and Exchange Commission.

Question 18

Cumulative preferred stockholders enjoy a promise that missed dividends will accumulate and be paid later, before any dividends are paid to common stockholders.

Accepted Answer

A) True 
 B)False

Question 19

A penny stock generally sells for a low initial price, pays regular dividends, and provides consistent growth in the stock's value.

Accepted Answer

A) True 
 B)False

Question 20

Institutional investors include insurance companies, individual investors, and mutual funds.

Accepted Answer

A) True 
 B)False

Exam 19: Using Securities Markets for Financing and Investing Opportunities

The initial cost of investing in mutual funds depends in part on

Correct AnswerverifiedShow Answer

Institutional investors include insurance companies, individual investors, and mutual funds.

Correct AnswerverifiedShow Answer

________ involve(s) computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.

Correct AnswerverifiedShow Answer

A margin call requires an investor to repay money borrowed from the broker used to purchase the stock.

Correct AnswerverifiedShow Answer

Cumulative preferred stockholders enjoy a promise that missed dividends will accumulate and be paid later, before any dividends are paid to common stockholders.

Correct AnswerverifiedShow Answer

According to the Connecting Through Social Media box, which of the following is a way the SEC changes altered securities laws following the JOBS Act?

Correct AnswerverifiedShow Answer

A ________ is a registered representative acting as an intermediary to buy and sell securities for clients.

Correct AnswerverifiedShow Answer

Buying several different investment alternatives to spread the risk helps an investor achieve

Correct AnswerverifiedShow Answer

Stocks of corporations with earnings expected to increase faster than other stocks are called ________ stocks.

Correct AnswerverifiedShow Answer

To reduce market volatility, ________ require that a key computer is turned off so that program trading is halted.

Correct AnswerverifiedShow Answer

Mutual fund investors will note that

Correct AnswerverifiedShow Answer

A blue chip stock represents a highly speculative stock investment.

Correct AnswerverifiedShow Answer

A penny stock generally sells for a low initial price, pays regular dividends, and provides consistent growth in the stock's value.

Correct AnswerverifiedShow Answer

Though Miguel relies on his stockbroker to execute his buy and sell orders for shares of stock, he has found that the process of buying or selling a share of stock on a major stock exchange normally takes

Correct AnswerverifiedShow Answer

Epic Electronics decides to pay off its bonds several years before the maturity date. Apparently, the bonds

Correct AnswerverifiedShow Answer

Insider trading laws prevent employees from buying or selling the securities of their employers.

Correct AnswerverifiedShow Answer

Penny stocks represent a high-risk stock investment.

Correct AnswerverifiedShow Answer

Which of the following offers low risk, guaranteed income, backed by the full faith and credit of the federal government?

Correct AnswerverifiedShow Answer

Game Guys announced a 2-for-1 common stock split for investors on record. Which of the following will occur?

Correct AnswerverifiedShow Answer

How do investment bankers generate revenues for their firms?

Correct AnswerverifiedShow Answer

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