C214 Chapter 1

Which of the following is an example of firm capital?

Cash

A Treasury bond is a debt instrument issued by corporations.

False

A stock is a debt instrument issued by corporations.

False

Which of the following is not an example of firm capital?

Financial markets

Capital is defined as a financial asset.

True

While competitive sales allow underwriters to submit bids to purchase bonds, negotiated sales do not.

False

A bond is a debt instrument issued by corporations or governments.

True

A bond is similar to a loan.

True

An IPO occurs on the primary market.

True

Auction markets have a physical location.

True

Companies can raise capital by issuing bonds or stocks.

True

Corporate finance focuses on the decision making by the management of the firm.

True

Primary financial markets are markets where issuers place new securities with investors.

True

Stock represents ownership in a particular company.

True

Stocks and bonds are two types of financial instruments.

True

Syndicates are generally made up of investment banks and other institutional investors.

True

Economics is a subfield of Finance

False

NASDAQ is the world's largest secondary financial market.

False

What are the two ways a syndicate can place a bond?

Competitive sale or negotiated sale

What are the three important areas of finance discussed in this section?

Corporate Finance, Investments, and Banking/financial institutions

An IPO is a seasoned equity offering.

False

Banks make money when interest rates they charge to borrowers are less than interest rates they pay depositors.

False

Corporate finance is devoted to understanding various types of financial instruments.

False

A stock is a share of ______________ in a particular company.

Ownership