BUAD 306 Lecture Questions

An agent who arranges a transaction between a buyer and a seller of equity securities is called a: A. Broker. B. floor trader. C. Capitalist. D. Principal. E. Dealer

A. Broker

Which bonds are riskier, all else equal? A. Secured debt versus a debenture? B. Subordinated debenture versus senior debt? C. A bond with a sinking fund versus one without? D. An AAA-rated bond versus a junk bond?

A. Debenture B. Subordinated C. Without one D. Junk bond

Mary just purchased a bond which pays $60 a year in interest. What is this $60 called? A. coupon B. face value C. discount D. call premium E. Yield

A. coupon

What's the minimal amount of votes a candidate has to have if there are 3 seats open and its cumulative voting?

25%

You own one share of a cumulative preferred stock that pays quarterly dividends. The firm has recently suffered some financial setbacks and has failed to pay the last two dividends. However, new funding has been arranged and the firm intends to restore all dividends, both common and preferred, this quarter. As a preferred shareholder, you should expect to receive the equivalent of ____ quarter(s) of dividends when the next dividend is paid. A. 0 B. 1 C. 2 D. 3 E. either 1, 2, or 3

D. 3

Which one of the following statements best defines the efficient market hypothesis? A. Efficient markets limit competition. B. Security prices in efficient markets remain steady as new information becomes available. C. Mispriced securities are common in efficient markets. D. All securities in an efficient market are zero net present value investments. E. Profits are removed as a market incentive when markets become efficient

D. All securities in an efficient market are zero net present value investments.

Which one of the following rights is never directly granted to all shareholders of a publicly held corporation? A. Electing the board of directors B. Receiving a distribution of company profits C. Voting either for or against a proposed merger or acquisition D. Determining the amount of the dividend to be paid per share E. Having first chance to purchase any new equity shares that may be offered

D. Determining the amount of the dividend to be paid per share

A bond that can be paid off early at the issuer's discretion is referred to as being which one of the following? A. zero coupon B. Callable C. Senior D. Collateralized E. unsecured

B. Callable

NYSE designated market makers: A. execute trades on behalf of their clients. B. are guaranteed a profit on every stock purchased and resold. C. act as dealers. D. provide a one-sided market. E. are also referred to as "$2 brokers."

C. act as dealers.

Which one of the following statements related to market efficiency tends to be supported by current evidence? A. It is easy for investors to earn abnormal returns. B. Short-run price movements are easy to predict. C. Markets are most likely only weak form efficient. D. Mispriced stocks are easy to identify. E. Markets tend to respond quickly to new information.

E. Markets tend to respond quickly to new information.

Which one of the following statements concerning bond ratings is correct? A. Investment grade bonds are rated BB or higher by Standard & Poor's. B. Bond ratings assess both interest rate risk and default risk. C. A high-yield bond has no default risk. D. A "fallen angel" is a bond that has moved from speculative grade to investment grade. E. None of the above

E. None of the above

Callander Enterprises stock is listed on NASDAQ. The firm is planning to issue some new equity shares for sale to the general public. This sale will occur in which one of the following markets? A. private B. auction C. exchange floor D. secondary E. primary

E. primary