Chapter #7 FIN300

A person on the floor of the NYSE who executes buy and sell orders on behalf of customers is called a(n):

floor broker.

Which one of the following represents the capital gains yield as used in the dividend growth model?

g

A bond that is payable to whomever has physical possession of the bond is said to be in ___:

Bearer form.

Which one of the following best describes NASDAQ?

Computer network of securities dealers

Which one of the following rights is never directly granted to all shareholders of a publicly held corporation?

Determining the amount of the dividend to be paid per share

A decrease in which of the following will increase the current value of a stock according to the dividend growth model?

Discount rate

A sinking fund is managed by a trustee for which one of the following purposes?

Early bond redemption

Which one of the following risk premiums compensates for the inability to easily resell a bond prior to maturity?

Liquidity

The Zuffa Company has a semi-annual coupon bond outstanding. A decrease in the market interest rate will have which one of the following effects on this bond, all else equal?

increase the market price

The dividend growth model:

requires the growth rate to be less than the required return.

Which one of the following transactions occurs in the primary market?

A purchase of newly issued stock from the issuer

A securities market primarily composed of dealers who buy and sell for their own inventories is referred to which type of market?

Over-the-counter

Which one of the following is an electronic system used by the NYSE for directly transmitting orders to designated market makers?

Pillar system

Ernst & Frank stock is listed on NASDAQ. The firm is planning to issue some new equity shares for sale to the general public. This sale will definitely occur in which one of the following markets?

Primary

Winston Co. has a dividend yield of 5.4 percent and a total return for the year of 4.8 percent. Which one of the following must be true?

The stock has a negative capital gains yield.

Which of the following statement is most FALSE?

The yield curve tends to be sharply decreasing as the economy comes out of a recession and interest rates are expected to rise.

You cannot attend the shareholder's meeting for Alpha United so you authorize another shareholder to vote on your behalf. What is the granting of this authority called?

Voting by proxy

NYSE designated market makers:

act as dealers.

An agent who arranges a transaction between a buyer and a seller of equity securities is called a:

broker.

An agent who maintains an inventory from which he or she buys and sells securities is called a:

dealer.

A member who acts as a dealer in a limited number of securities on the floor of the NYSE is called a:

designated market maker.

T reasury yield curve plots the interest rates relative to which one of the following?

time to maturity

The secondary market is best defined as the market:

where outstanding shares of stock are resold.