Money market securities have maturities of one year or less.
Preferred stock pays a variable dividend.
The cost of borrowing funds is most commonly called the interest rate.
The primary market is the only market in which the issuer is directly involved in the transaction and recieves direct benefits from the issue.
The over-the-counter market is generally reserved for stocks with very large trading volume.
T-Bonds are money market securities, while T-bills and T-notes are traded in the capital market.
Market makers include both specialist and dealers.
Specialist and dealers determine the price of the security.
Corporate bonds pay interest payments that are usually tax-exempt to investors.
The New York Stock Exchange is an example of an organized market.
Earnings should retained only if the firm needs capital very badly and would have difficulty raising it from external sources.
The importance of the role of financial management is emphasized by examples of companies whose strategic financing decisions contributed to their demise, or to their success when economic conditions changed rapidly.
The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed.
The two most important functions of markets are to establish fair prices and provide liquidity.
Bonds are long-term loans that typically pay interest per year based on the average bank rate.
The _______ is a financial relationship created by a number of institutions with arrangements that allow the suppliers and demanders of long term funds to make transactions.
money market
bond market
capital market
eurobond market
The AMEX Exchange could be classified as a/an ______ security exchange.
organized
over-the-counter
primary
closed
In the over-the-counter market, dealers are linked with the purchasers and sellers of securities through the _____ system.
NASDAQ
bonds
stocks
short-term funds
Common stockholders expect to receive a return through capital gains and
interest payments
dividends
fixed periodic dividends
coupon payments
Bonds with an AAA rating will have a ______ interest rate compared to bonds with a BAA rating.
lower
equal
higher
undetermined
The______ is the financial market in which securities are initially issued.
OTC
secondary market
primary market
private placement
________ are long-term debt instruments that are used by business and government to raise large sums of money.
T-bills
Common stock
Preferred stock
Bonds
Shares of ____ are units of ownerships interest, or equity, in a corporation.
bank loans
common stock
debt
commercial paper
The possibility that the issuer of debt will not pay the principal as scheduled.
liquidity risk
default risk
contractual risk
maturity risk
Which of the following does not need to be considered when assessing the impact of financial decision?
Financial market conditions
timing of the earnings flow
project earnings
all of the above must be considered.
Money markets are markets for
foreign currency exchange
corporate stocks
long-term bonds
short-term debt securities
Which of the following is not a major participant in the money market.
Federal Reserve
Commercial Banks
Money Market Mutual Funds
Wall Street Dealers
If a $2,000 bond is quoted at 120:16, the price of the bond is ______
1,205.31
1,205.00
2,410.62
2,410.00
The difference between Common Stock and Preferred Stock lies in:
vote or not
fixed or variable dividends
Priority of claim on assets
all of the above
