Intro to Business Chapter 19

U.S. government, municipal, and corporate bonds

The three main types of bonds are

maturity

A bondholder will receive the face value of the bond on the ________ date.

premium

A few weeks ago, Isabel purchased a bond at $1,000 face value. She checked bond prices and learned that the bond is currently worth $1,012.50. She can sell her bond at a

bull

A market in which share prices are rising, encouraging buying, is called a _______ market.

no-load fund

A mutual fund that does not charge commission to buy or sell its shares is called a(n)

bonds

A successful Fortune 100 corporation has 1,000,000 shares of outstanding stock and needs to raise additional capital to expand its production facility. The CFO believes that, instead of selling more equity, the company should use debt to finance this project. The CFO's recommendation is to issue

index

A(n) _____ fund is a mutual fund that invests in stocks that are representative of a market, such as those listed in the Standard & Poor's 500.

exchange-traded fund

Alejandro has several mutual funds in his portfolio, but he wants to diversify further. If he wants to buy and sell securities throughout the day rather than waiting until the end of the day, he should look for a(n)

bonds must be repaid at face value at the time of maturity

All of the following are advantages for a company issuing bonds EXCEPT that

a gut feeling about the investment

All of the following are important criteria to consider before investing EXCEPT

private investors

All of the following would be considered institutional investors EXCEPT

liquidity

Arnold is a young professional who is considering investing some of his money. Given the current economy, he may need to quickly cash in his investment, so he should consider his investment's

number of shares the fund issues

Closed-end and open-end funds are characterized by the

junk bonds

Corporate bonds with a low credit rating and a high risk for default are called

a bond

Firms and municipal entities can raise money by issuing official "IOUs" which they have to repay at face value on the maturity date. One advantage of this type of financing is that the interest paid to the holder is tax deductible. This IOU is called

stockholders get to be repaid on their investment

From the company's perspective, the benefits of issuing stock include all of the following EXCEPT

higher the promised rate of return

Generally speaking, the more risk a bond carries, the

over-the-counter market

If a company fails to meet the stock exchange's minimum requirements, its stock can be de-listed from an exchange. In these instances, the stock can still be traded on the

split the stock

If the price of a company's stock is too high, many investors cannot afford to buy the stock. In order to make the stock less expensive and more appealing to a larger group of investors, the company can

insider trading

Mark works at an investment bank and heard that Microsoft was planning to buy Yahoo for $30 per share over the market price. He called his friend to share the news, and his friend e-mailed his aunt in Europe telling her to quickly buy $300,000 worth of Yahoo stock. This is an example of

watching market indexes such as the Dow Jones Industrial Average

One way that investors can assess the direction of the market over time is by

prospectus

OneWeb, a privately held corporation, plans to go public. OneWeb's CFO has filed the firm's financial information with the SEC. He must also prepare a __________ to send to potential investors.

understand the information posted on the Internet or published by multiple sources

Online trading services target those investors who

buying stock on margin

Purchasing stocks by borrowing some of the purchase cost from the brokerage firm is known as

investment banker

Sara is the chief financial officer (CFO) of a large private corporation that is planning a major expansion. She is preparing her company for an initial public offering (IPO) and needs to select an underwriter. Sara will most likely use a(n)

offering them a place to buy and sell securities

Secondary markets help private investors by

30 industrial

The Dow Jones Industrial Average represents the average price of ______ stocks

common stockholders have voting rights and preferred stockholders do not

The difference between common stockholders and preferred stockholders is that

blue chip

The stocks of well-known, high quality firms, such as Coca-Cola, GE and Procter & Gamble are called ______ stocks.

Securities and Exchange Commission

The federal agency that has responsibility for regulating the various stock exchanges is the

dividends

The fraction of a firm's after-tax profits that is distributed to stockholders is called

NASDAQ

The nationwide electronic system that links dealers across America so that investors can buy and sell securities is called the

a capital gain

The positive difference between the price at which you purchase a stock and the price at which you sell it is referred to as

initial public offering (IPO)

The primary market helps businesses find long-term financing. A company can raise funds by offering their stock to the general public. This is referred to as a(n)

find financing for capital improvements or business expansion.

The primary securities market enables businesses to

Standard & Poor's 500

There are many stock market indicators that measure a portion of the stock market. A more comprehensive index is the

debenture bonds

There are two primary types of bonds: secured bonds—which are backed by collateral, and unsecured bonds—which are backed only by the organization's name. Unsecured bonds are also called

they are fully backed by the U.S. government

U.S. government bonds are a secure investment because

common stock

Which of the following securities provides the holder with both voting rights and shares of the firm's profits in the form of dividends?

Mutual

______ funds pool together money from multiple investors to buy a large variety of stocks or bonds.

Yield

_______ refers to how much of a return you can expect on your investment in the form of interest or dividend payments over a period of time.

Stockbrokers

________ are registered representatives whose business is to know the securities market and help their clients buy and sell stocks and bonds.

program trading

computer-assisted trading of stocks according to systems in which the decision to sell is triggered automatically by fluctuations in the stock price is known as