Question 1
Question
Money market securities have maturities of one year or less.
Question 2
Question
Preferred stock pays a variable dividend.
Question 3
Question
The cost of borrowing funds is most commonly called the interest rate.
Question 4
Question
The primary market is the only market in which the issuer is directly involved in the transaction and recieves direct benefits from the issue.
Question 5
Question
The over-the-counter market is generally reserved for stocks with very large trading volume.
Question 6
Question
T-Bonds are money market securities, while T-bills and T-notes are traded in the capital market.
Question 7
Question
Market makers include both specialist and dealers.
Question 8
Question
Specialist and dealers determine the price of the security.
Question 9
Question
Corporate bonds pay interest payments that are usually tax-exempt to investors.
Question 10
Question
The New York Stock Exchange is an example of an organized market.
Question 11
Question
Earnings should retained only if the firm needs capital very badly and would have difficulty raising it from external sources.
Question 12
Question
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.
Question 13
Question
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.
Question 14
Question
The two most important functions of markets are to establish fair prices and provide liquidity.
Question 15
Question
Bonds are long-term loans that typically pay interest per year based on the average bank rate.
Question 16
Question
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.
Answer
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money market
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bond market
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capital market
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eurobond market
Question 17
Question
The AMEX Exchange could be classified as a/an ______ security exchange.
Answer
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organized
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over-the-counter
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primary
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closed
Question 18
Question
In the over-the-counter market, dealers are linked with the purchasers and sellers of securities through the _____ system.
Answer
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NASDAQ
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bonds
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stocks
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short-term funds
Question 19
Question
Common stockholders expect to receive a return through capital gains and
Answer
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interest payments
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dividends
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fixed periodic dividends
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coupon payments
Question 20
Question
Bonds with an AAA rating will have a ______ interest rate compared to bonds with a BAA rating.
Answer
-
lower
-
equal
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higher
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undetermined
Question 21
Question
The______ is the financial market in which securities are initially issued.
Answer
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OTC
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secondary market
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primary market
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private placement
Question 22
Question
________ are long-term debt instruments that are used by business and government to raise large sums of money.
Answer
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T-bills
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Common stock
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Preferred stock
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Bonds
Question 23
Question
Shares of ____ are units of ownerships interest, or equity, in a corporation.
Answer
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bank loans
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common stock
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debt
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commercial paper
Question 24
Question
The possibility that the issuer of debt will not pay the principal as scheduled.
Answer
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liquidity risk
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default risk
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contractual risk
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maturity risk
Question 25
Question
Which of the following does not need to be considered when assessing the impact of financial decision?
Answer
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Financial market conditions
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timing of the earnings flow
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project earnings
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all of the above must be considered.
Question 26
Question
Money markets are markets for
Question 27
Question
Which of the following is not a major participant in the money market.
Question 28
Question
If a $2,000 bond is quoted at 120:16, the price of the bond is ______
Answer
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1,205.31
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1,205.00
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2,410.62
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2,410.00
Question 29
Question
The difference between Common Stock and Preferred Stock lies in: