Ch 5 Quiz Finance
3
QUESTION 1 1. The first public sale of company stock to outside investors is called a/an 1 . proxy fight. 2 . shareholders’ meeting. 3 . seasoned equity offering. 4 . initial public offering. 10 points QUESTION 2 1. Which statement about common shareholders is incorrect ? 1 . Shareholders only have a residual claim. 2 . Shareholders have a voting right. 3 . Shareholders have precedence over all other claimholders in the case of bankruptcy. 4 . Shareholders are the ultimate owners of a corporation. 10 points QUESTION 3 1. What is the market capitalization of a company? 1 . The market value of all outstanding debt. 2 . The book value of the company’s debt. 3 . The book value of the company’s total equity. 4 . The market value of all outstanding shares. 10 points QUESTION 4 1. Debt holders: 1 . have little say in how the firm conducts its business. 2 . are the residual owners of a corporation.
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Transcript of Ch 5 Quiz Finance
QUESTION 11. The first public sale of company stock to outside investors is called a/an
1.
proxy fight.
2.
shareholders’ meeting.
3.
seasoned equity offering.
4.
initial public offering.
10 points QUESTION 2
1. Which statement about common shareholders is incorrect ?1.
Shareholders only have a residual claim.
2.
Shareholders have a voting right.
3.
Shareholders have precedence over all other claimholders in the case of bankruptcy.
4.
Shareholders are the ultimate owners of a corporation.
10 points QUESTION 3
1. What is the market capitalization of a company?1.
The market value of all outstanding debt.
2.
The book value of the company’s debt.
3.
The book value of the company’s total equity.
4.
The market value of all outstanding shares.
10 points QUESTION 4
1. Debt holders:1.
have little say in how the firm conducts its business.
2.
are the residual owners of a corporation.
3.
cannot force the firm into bankruptcy court if it fails to make the scheduled interest and principal payments on time.
4.
are willing to accept more risk than the stockholders in the corporation.
10 points QUESTION 5
1. When valuing a preferred stock, the type of security that we treat the preferred stock like, for valuation purposes, is
1.
a perpetuity.
2.
a bond.
3.
a common stock.
4.
none of the above.
10 points QUESTION 6
1. Which is TRUE concerning preferred stock?1.
Preferred stock is considered debt on the company balance sheet.
2.
Preferred stock holders have voting rights for the company board of directors.
3.
Preferred stock is viewed as less risky than a firm’s common stock.
4.
Preferred stock payments are variable like common stock.
10 points QUESTION 7
1. Which of the following activities is not one of the three principal lines of business for U.S.-based investment banks?
1.
Corporate finance
2.
Working capital management
3.
Asset management
4.
Trading
10 points QUESTION 8
1. A "dealer market" is:1.
when buyers and sellers contact each other directly to arrange an exchange of securities.
2.
a market in which the buyer and seller are not brought together directly but, rather, have their orders executed by securities dealers.
3.
a market in which buyers and sellers are brought together on a securities exchange to trade securities.
4.
none of the above
10 points QUESTION 9
1. A "broker market" is:1.
when buyers and sellers contact each other directly to arrange an exchange of securities.
2.
a market in which the buyer and seller are not brought together directly but, rather, have their orders executed by securities dealers.
3.
a market in which buyers and sellers are brought together on a securities exchange to trade securities.
4.
none of the above
10 points QUESTION 10
1. Which of the following would NOT fall under the classification of a broker market?1.
New York Stock Exchange
2.
American Stock Exchange
3.
NASDAQ
4.
All of the above are classified as broker markets
