This document contains 20 multiple choice questions about equity markets. The questions cover topics such as capital market securities, common stock characteristics, shareholder voting rights, shareholder equity, security exchange functions, capital market regulation, and types of investment risk. Correct answers are not provided. The purpose seems to be to test knowledge of fundamental concepts related to equity investments and markets.
This document contains 20 multiple choice questions about equity markets. The questions cover topics such as capital market securities, common stock characteristics, shareholder voting rights, shareholder equity, security exchange functions, capital market regulation, and types of investment risk. Correct answers are not provided. The purpose seems to be to test knowledge of fundamental concepts related to equity investments and markets.
This document contains 20 multiple choice questions about equity markets. The questions cover topics such as capital market securities, common stock characteristics, shareholder voting rights, shareholder equity, security exchange functions, capital market regulation, and types of investment risk. Correct answers are not provided. The purpose seems to be to test knowledge of fundamental concepts related to equity investments and markets.
This document contains 20 multiple choice questions about equity markets. The questions cover topics such as capital market securities, common stock characteristics, shareholder voting rights, shareholder equity, security exchange functions, capital market regulation, and types of investment risk. Correct answers are not provided. The purpose seems to be to test knowledge of fundamental concepts related to equity investments and markets.
1. Which of the following is not an example of capital market securities?
a. common stocks b. convertible bonds c. commercial paper d. mortgages
2. All but one of the following is associated with characteristics of common stock? a. residual claim on income and assets b. proxy c. cumulative dividends d. dual-class stock
3. Investors with 30 per cent of the voting stock of a corporation, interested in a seat on the board of directors, had better have __________ voting privileges. a. straight b. cumulative c. proxy d. limited
4. The term shareholder equity implies
a. a right to dividends. b. a contractual relationship with a corporation. c. an ownership claim. d. a prior claim on income and assets.
5. All but one of the following are terms associated with common stock? a. contractual b. residual c. ownership d. limited liability
6. Security exchanges provide a valuable function in that they
a. create interest in stocks. b. increase the marketability of securities. c. provide a legal way to gamble. d. supply money to deficit spending units.
7. Regulators provide a valuable function for the capital markets because they a. try to keep the market participants honest. b. try to prevent excessive speculation from destabilizing the market. c. make sure all pertinent information about publicly traded securities is disclosed. d. all of the above
8. A shareholder in a troubled corporation is not likely to lose his/her
a. money invested in the stock. b. house. c. dividends declared. d. par value.
9. The household sector is the largest surplus sector and invests in the capital market a. directly by purchasing stocks and bonds. b. directly by issuing assets payable in the capital market. c. both directly (owning stocks) and indirectly (pension fund reserves, etc.) d. both a and c above
10. In a board of directors election for five directors and straight voting, a majority group of shareholders will elect a. four directors. b. five directors. c. four or five depending on how the cumulative voters vote. d. the same proportional share of directors as their ownership share.
11. The sale of securities to the public via an investment banker by a new corporation raising funds is called a. a seasoned offering. b. a secondary offering. c. an initial public offering. d. a best efforts offering.
12. The New York Stock Exchange is a(n) ________ market.
a. auction b. exchange c. secondary d. all of the above
13. The bid-ask spread for equity securities tends to be _______ for more frequently traded stocks and _______ for stocks which have more traders with inside information. a. less; more b. less; less c. more; more d. more; less
14. The over-the-counter market trades ______ stocks than exchanges, and exchanges tend to list ________ companies. a. less; smaller b. less; larger c. more; larger d. more; smaller
15. All but one of the following are reasons for not listing a stock on an exchange? a. limited trading in the stock b. small issue size c. having excellent support by NASD dealers d. having a large number of public shareholders
16. An order to the New York Stock Exchange to buy or sell at the best price available is called a. a limit order. b. a stop order. c. a market order. d. none of the above.
17. Advances in technology and competition have created all but one of the following in equity markets? a. higher transaction costs b. the development of a national market system c. 24-hour trading of some stocks d. globalization of equity markets
18. Which of the following is true about secondary markets?
a. A buyer may incur search costs and find a seller on their own, called a direct search. b. A broker may bring buyer and seller together, charging a commission. c. A dealer may sell/buy (bid/ask) securities from an inventory of securities, reducing search costs. The dealer's return is the bid/ask spread. d. An auction market allocates the selling shares to the highest bidder, providing a buyer/seller. e. all of the above are true.
19. The primary federal regulator of stock markets
a. are the state securities commissions in fifty states. b. is the NASD. c. is the Securities Investor Protection Corporation. d. is the Securities and Exchange Commission.
20. Investors in well diversified stock portfolios are concerned about ________ risk. a. specific stock b. unsystematic c. systematic d. diversifiable
