C214 Chapter 1
Which of the following is an example of firm capital?
Cash
A Treasury bond is a debt instrument issued by corporations.
False
A stock is a debt instrument issued by corporations.
False
Which of the following is not an example of firm capital?
Financial markets
Capital is defined as a financial asset.
True
While competitive sales allow underwriters to submit bids to purchase bonds, negotiated sales do not.
False
A bond is a debt instrument issued by corporations or governments.
True
A bond is similar to a loan.
True
An IPO occurs on the primary market.
True
Auction markets have a physical location.
True
Companies can raise capital by issuing bonds or stocks.
True
Corporate finance focuses on the decision making by the management of the firm.
True
Primary financial markets are markets where issuers place new securities with investors.
True
Stock represents ownership in a particular company.
True
Stocks and bonds are two types of financial instruments.
True
Syndicates are generally made up of investment banks and other institutional investors.
True
Economics is a subfield of Finance
False
NASDAQ is the world's largest secondary financial market.
False
What are the two ways a syndicate can place a bond?
Competitive sale or negotiated sale
What are the three important areas of finance discussed in this section?
Corporate Finance, Investments, and Banking/financial institutions
An IPO is a seasoned equity offering.
False
Banks make money when interest rates they charge to borrowers are less than interest rates they pay depositors.
False
Corporate finance is devoted to understanding various types of financial instruments.
False
A stock is a share of ______________ in a particular company.
Ownership
