Chapter 7 finance
Computing the present value of a growing perpetuity is most similar to computing the current value of which one of the following?
Stock with a constant-growth dividend
There are two open seats on the board of directors. If two separate votes occur to elect the new directors, the firm is using a type of voting that is best described as ________ voting.
Straight
A broker is an agent who:
brings buyers and sellers together.
What is the market called that facilitates the sale of shares between individual investors?
Secondary
The dividend yield is defined as:
next year's expected dividend divided by the current market price per share.
Jensen Shipping has four open seats on its board of directors. How many shares will a shareholder need to control to ensure that his or her candidate is elected to the board given the fact that the firm uses straight voting? Assume each share receives one vote.
50% plus one
Which one of the following must equal zero if a firm pays a constant annual dividend?
Capital gains yield
Which one of the following types of securities has the lowest priority in a bankruptcy proceeding?
Common stock
Mary owns 100 shares of stock. Each share entitles her to one vote per open seat on the board of directors. Assume there are three open seats in the current election and Mary casts all 300 of her votes for a single candidate. What is the term used to describe this type of voting?
Cumulative
Which type of stock pays a fixed dividend, receives first priority in dividend payment, and maintains the right to a dividend payment, even if that payment is deferred?
Cumulative preferred
The specific location on the floor of an exchange where a particular security is traded is called a:
DMM's Post
An agent who buys and sells securities from inventory is called a
Dealer
Which one of the following players on the floor of the NYSE is obligated to maintain a two-sided, orderly market for a limited number of securities?
Designated market maker
The capital gains yield equals which one of the following
Dividend Growth
The constant growth model can be used to value the stock of firms that have which type(s) of dividends?
Dividends that are either constant or change annually at a constant rate
Which one of the following is an electronic network that enables Katie to sell her shares of ABC stock directly to Marti?
ECN
A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a:
Floor broker.
Which statement is true?
From a legal perspective, preferred stock is a form of corporate equity.
The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets
Global Select
Which one of the following will increase the current value of a stock?
Increase in the capital gains yield
Inside quotes are defined as the
Lowest and Highest bid offers
Any person who owns a license to trade on the NYSE is called a:
Member
Which one of the following features applies to NASDAQ but not the NYSE
Multiple Market Maker
A DMM is a(n):
NYSE Member
Companies can list their stock on which one of the following without having to meet listing requirements or filing financial statements with the SEC?
Pink sheets
Which one of the following statements is correct?
Preferred stock can be callable.
Newly issued securities are sold to investors in which one of the following markets?
Primary
Kate could not attend the last shareholders' meeting and thus she granted the authority to vote on her behalf to the managers of the firm. Which term applies to this granting of authority?
Proxy
Supplemental liquidity providers (SLPs) trade securities on behalf of:
Their own accounts
Gleason, Inc., elects its board of directors on a staggered basis using cumulative voting. This implies that:
all open positions are filled with one round of voting, assuming there are no tie votes.
NASDAQ is best described as:
an electronic network of securities dealers.
If a trade is made "in the crowd," the trade has occurred
between two brokers
Dividends are:
cash or stock payments to shareholders
Dividends are best defined as:
cash or stock payments to shareholders.
Most trades on the NYSE are executed:
electronically.
If shareholders are granted a preemptive right they will:
have priority in the purchase of any newly issued shares
On which one of the following dates do dividends become a liability of the issuer for accounting purposes?
on the declaration date
The stream of customer instructions to buy and sell securities is called the:
order flow.
To be a member of the NYSE, you must
own a trading license
The NYSE:
presently conducts all of its trading through SuperDOT.
The dividend yield on a stock will increase if the:
stock price decreases.
In November 2013, the NYSE was acquired by:
the Intercontinental Exchange