FINN 3053 Ch8

A shelf registration allows firms the opportunity to avoid the normal ______________ day waiting period by allowing preregistration of securities for up to ______________ years.

20; 2

In 2007 the NYSE merged with _________________.

Euronext

At year-end a firm has assets of $100 and debts due of $120. In this situation, the stockholders must pay an additional $20 out of their own pocket.

False

Dual class stock refers to firms with both common and preferred stock outstanding.

False

In cumulative voting, a stockholder who owns 51 percent of the shares can be assured of the ability to elect the entire board of directors.

False

The market in which firms sell new securities to raise cash is called the secondary market.

False

Suppose that over the last 10 to 15 years significantly large numbers of investors have been able to earn abnormal returns from using the firm's publicly available financial information to forecast growth in earnings and dividends. This would be evidence that the markets are not I. weak form efficient. II. semi-strong form efficient. III. strong form efficient.

I and II only

Which of the following is/are true about specialists? I. Investment banks generally cannot be specialists. II. Specialists are used by the NASDAQ system. III. Market and limit orders are transacted at specialist posts, but the specialist's own account orders are executed elsewhere. IV. Specialists help maintain continuous trading.

I and IV only

Common stocks typically have which of the following that bonds do NOT have? I. Voting rights II. Fixed cash flows III. Set maturity date IV. Tax deductibility of cash flows to investors

I only

Which of the following indexes are value-weighted? I. NYSE Composite II. S&P 500 III. NASDAQ Composite IV. Dow Jones Industrial Average

I, II, and III

In terms of volume of trading and market value of firms traded, the _____________ is the largest U.S. stock market. In terms of number of firms traded, the ___________ is the largest in the United States.

NYSE; NASDAQ

A seasoned equity offering occurs when an issuer that already has equity publicly trading issues new shares to the public.

True

A type of absentee ballot that allows a representative to vote on behalf of the stockholder is called a proxy.

True

An order to buy shares of stock at a specified price or better is called a limit order.

True

If the stock markets are semi-strong efficient, stock prices reflect all historic and current public information about a firm but prices do not reflect inside information.

True

In the event of bankruptcy, a firm's janitor must be paid all of the salary owed to him before stockholders receive anything.

True

Preferred stockholders have a claim senior to common stock but junior to bondholders.

True

The Dow Jones Industrial Average is a price-weighted index of 30 stocks chosen to represent the overall market.

True

The preemptive right is designed to

allow existing shareholders to buy shares of the new offering if they desire

If all preferred dividend payments that have been missed must be paid before any common stock dividend can be paid, the preferred stock is called _____________ preferred stock.

cumulative

With ____________ voting, all directors up for election are voted on by the shareholders at the same time in one general election.

cumulative

NYSE listing has traditionally benefited a firm by

improving the stock's price, generating increased publicity for the firm, and providing easier access to primary market capital.

If the net proceeds are greater than the gross proceeds in an underwritten offering, then

none of the above

The stamp on a prospectus accompanying a new issue that indicates the issue has not yet been approved for sale by the SEC is called the

red herring

The preliminary version of a security offer that is circulated to potential buyers before SEC approval (registration) is obtained is called a

red herring prospectus

In a ____________ offering the firm preregisters with the SEC any securities it wishes to sell over the next two years.

shelf

Which of the following information is NOT usually found in a Wall Street Journal stock quote?

stock rating