279. (p. 515) Wyoming Mining utilizes a:
D. retirement escrow account.
280. (p. 515) Portland Power and Light recently issued bonds that offered no collateral except the reputation and
established name of the Portland Power and Light Company. These represent ________ bonds.
D. conveyance
281. (p. 513) Maplewood Toy Company hopes to raise long-term capital by promising in writing to repay the
principal provided by potential creditors in ten years. Additionally, the certificate issued by Maplewood
promises to pay 10% interest annually for the ten year life of the security. Maplewood intends to sell:
D. commodities.
282. (p. 516) After owning a Cordero Company bond for five years, Gabrielle exercised an option that allowed her
to exchange her bond for 20 shares of the company stock. Gabrielle apparently owned a(n):
A. callable bond.
283. (p. 517) Which of the following securities provides the owner the right to vote for the corporate board of
directors?
D. callable bonds
284. (p. 517) Many firms offer two types of stock:
D. common and superior stock.
285. (p. 516) A ________ certificate provides evidence of ownership in a specific corporation.
D. capital
286. (p. 518) __________ represents the most basic form of ownership and includes voting rights in the company
and dividends, if and when the firm pays dividends.
D. Carrier stock
287. (p. 516) That portion of a firm’s profits distributed to stockholders represent the firm’s:
A. equity capital.
288. (p. 516) The dollar amount assigned to shares of stock by the corporation’s charter represents the stock’s:
A. net asset value.
289. (p. 517) When investors purchase ________ stock, they receive a priority claim in the payment of dividends
and assets if the business is liquidated. However, these investors do not have voting rights.
D. debenture
290. (p. 518) Investors in ________ preferred stock receive a guarantee that missed dividends will accumulate and
potentially be paid later.
A. participating
291. (p. 518) Each share of common stock provides the investor with a ________ right that offers the investor the
first right to purchase any new shares of common stock the firm decides to issue. This allows common
stockholders to maintain a proportional share of ownership in the company.
D. convertible
292. (p. 517) When issuing stock to obtain long-term funding, dividend payments are:
A. tax deductible.
293. (p. 516) Stock certificates represent evidence of ownership in an organization. A stock certificate contains
which of the following?
294. (p. 518) Forrest surprises his friends by sharing that he just cast four votes in the election of the board of
directors of Microsoft. Apparently, Forrest owns __________ stock in Microsoft.
A. preferred
295. (p. 517) Dividends are paid out of a corporation’s:
D. capital contributed by bondholders.
296. (p. 518) Dividends on preferred stock are:
A. paid after common stockholders receive their dividends.
297. (p. 518) Which of the following guarantees preferred stockholders payment of missed dividends before any
dividends are paid to common stockholders?
D. convertible preferred
298. (p. 517) After many years as a privately held corporation, Connecticut Industries decided to offer stock to the
general public. Connecticut may discover that stockholders:
A. expect to be repaid at a future date.
299. (p. 517) The disadvantages of selling stock to obtain long-term financing include:
A. the legal obligation to pay dividends if the company is profitable.
300. (p. 518) When Tong Su purchased 500 shares of preferred stock in the Vibrates Corporation, his certificate
indicated the stock had a par value of $50 per share. This means that Tong Su:
A. will never get less than $50 per share when selling his stock.
301. (p. 516) Georgia Corporation, known for its very generous dividend policy, easily attracts investors. These
dividend payments basically represent:
D. income that is sheltered from taxes.
302. (p. 517) Ellie owns stock in Rotary Technologies. Her stock provides a priority claim on dividend payments
and on the firm’s assets in the event of liquidation. However, her ________ stock ownership does not offer her
voting rights.
D. callable
303. (p. 518) Tyrone owns shares of ________ stock in New Jersey Industries. His stock certificate states that any
missed dividends will be paid prior to any future common stock dividend payments.
A. classified common
304. (p. 518) Maureen owns 20% of the common stock of the Queen Bean Corporation. The company announced
plans to offer an additional 10,000 shares of common stock for sale. If Maureen exercises her preemptive rights,
Queen Bean must offer her the opportunity to purchase:
D. 20% of the outstanding preferred stock.
305. (p. 520) Which of the following terms best describes the relationship between the New York Stock Exchange
and the NASDAQ?
A. cooperative
306. (p. 519) An organization whose members can buy and sell securities for companies and investors is known as
a:
A. public broker.
307. (p. 519, Dealing with Change box) A membership to a stock exchange is called a(n):
D. pit.
Nickels – Chapter 19 #307
308. (p. 519) Which of the following represents the largest floor-based stock exchange in the United States?
D. Transnational Stock Exchange
309. (p. 519) Both the New York Stock Exchange and the American Stock Exchange trade the stocks of
companies from all over the U.S. This indicates that they represent:
A. limited partnerships.
310. (p. 519) The second largest floor-based stock exchange is the:
A. Chicago Stock Exchange.
311. (p. 520) If a corporation fails to maintain specific minimum requirements, the exchange can ________ the
firm’s securities.
A. re-list
312. (p. 520) The ________ represents a network of stockbrokers who trade in the securities of corporations not
listed on the national exchanges.
A. SEC
313. (p. 519-520) The Chicago Stock Exchange, an example of a(n) ________, primarily trades in the stocks of
Midwestern companies.
A. over-the-counter exchange
314. (p. 520) Which of the following trades in corporate stocks not listed on the national securities exchanges?
A. Federal Investment Assurance Agency
315. (p. 520) A(n) ________ represents a condensed version of the registration statement that enables prospective
investors to evaluate a stock for possible purchase.
A. insider report
316. (p. 520) Which of the following federal government agencies has responsibility for regulating the various
stock exchanges?
D. ICC
317. (p. 521) Using information not available to the public to unfairly benefit in the stock market represents:
A. security fraud.
318. (p. 520) Which of the following legislative acts created the Securities and Exchange Commission?
A. Dealers Trust and Assistance Act of 1933
319. (p. 520) Which of the following lists the securities of the greatest number of firms?
D. Chicago Board of Trade
320. (p. 521) Suzanne wants to purchase stock in a company that is headquartered in Germany. Suzanne:
A. will have to place her order through the Frankfurt Stock Exchange.
321. (p. 520) Institutional investors often trade securities listed on regional exchanges even though the same
securities are available on the New York Stock Exchange. By comparison to national exchanges, trading on
regional stock exchanges offers the advantage of:
D. online security trading.
322. (p. 521) The Securities and Exchange Commission has accused Martha of benefiting unfairly from
information secured from a corporate officer of Stewart Engineering. Because Martha used that information to
profit in the stock market, she faces ________ charges.
D. short selling
323. (p. 520) After operating for years as a privately held corporation, MidAtlantic Ironworks plans to publicly
trade its stock. As a midsized firm, MidAtlantic hopes to list their securities with a minimum of paperwork and
disclosure. The ________ provides the best fit for MidAtlantic’s plans.
D. secondary market
324. (p. 519-520) Regional stock exchanges primarily trade:
A. blue chip stocks.
325. (p. 520) Paula’s Pasta Paradise plans to offer their first stock sale to the general public. Prior to selling their
stock, the firm must:
D. determine the brokers that will initially trade their stock offering.
326. (p. 522, Legal Briefcase box) According to the “Legal Briefcase” box in Chapter 19, insider trading occurs when:
327. (p. 522) A ________ acts as an intermediary to buy and sell securities for clients.
D. trading accountant
328. (p. 522) When an investor places a buy order with a stockbroker, the broker contacts a(n) __________ to
complete the transaction.
329. (p. 523) Investors trading online:
A. receive more advice than offered by traditional stockbrokers.
330. (p. 523) Investing on-line is usually ________ than trading through a traditional stock brokerage firm.
D. less profitable
331. (p. 524) The first step in establishing an investment strategy is the:
D. timing of the market’s fluctuations.
332. (p. 524) Which of the following securities would investors consider the most risky?
D. mutual funds
333. (p. 525) Which of the following represent criteria used when selecting an investment option?
334. (p. 524) When an investor purchases a security, the investor does so with the expectation of:
A. maintaining his or her capital position.
335. (p. 523) On-line trading services target those investors who:
A. require the research and advice of a licensed stockbroker.
336. (p. 525) Which of the following measures how quickly an investor can get back the invested funds when
desired?
A. risk
337. (p. 524) Regis and Kathy plan to invest in corporate securities. While Regis plans to retire next year on his
65th birthday, Kathy is celebrating her first job after college and her 22nd birthday. Which of the two investors
C. A conservative investment strategy is always the best strategy.
D. It depends on whether they want to invest in stocks or bonds.
338. (p. 522) Jebb relies on his stockbroker to execute his buy and sell orders for shares of stock in different
companies. He has found that the process of buying or selling a share of stock on a major stock exchange
normally takes:
D. months.
339. (p. 524, Reaching Beyond Our Borders box) According to the “Reaching Beyond Our Borders” box in Chapter 19, one
way to reduce the risk of investing in the global financial market is to:
A. trade securities with brokers in the foreign country in which you desire to invest.
340. (p. 523) Online investors:
A. have access to significantly less company information than clients of traditional brokerage firms.
341. (p. 525) Bondholders can sell their bonds:
D. after receiving the written permission of other stakeholders.
342. (p. 526) 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 Commission
343. (p. 526) Bonds sold at a ________, sell for less than face value.
D. date before the maturity date
344. (p. 526) Bonds offering a higher interest rate than other bonds of similar risk, will likely sell at a:
A. secondary market.
345. (p. 526) The higher the risk associated with a bond issue, the ________ the interest rate the organization must
offer investors.
D. less stable
346. (p. 525) Which of the following offers low risk, guaranteed income, backed by the full faith and credit of the
federal government?
A. municipal bonds
347. (p. 526) When interest rates increase, the selling price of existing bonds will:
D. be less volatile.