Chapter 7,10, & 11 Quiz Conceptual Essentials
The stream of customer instructions received by an stock exchange to buy and sell common stock is called the:
order flow.
The shareholders of Xyzrox have a preemptive right. Xyzorx has decided to sell 1,000,000 new shares of common stock. They currently have 1,000,000 shares outstanding. The preemptive right allows the current Xyzorx shareholders to:
purchase 1 share of stock in the new common stock sale for each share they own.
The dividend yield on a stock is similar to the current yield on a bond in that both:
represent the security's annual income divided by its price.
Preferred stock has a ___________ dividend that does not _______
fixed; change
The lower the Beta on a security, the market risk is _____ and the investor should expect a _____ level of return.
lower; lower
The security market line has a slope equal to the
market risk premium
An investor is considering purchasing a Treasury bond to add to her portfolio of 20 stocks. This purchase __________ ___________the weighted average beta of the portfolio.
will decrease
Which one of the following types of securities has the least or lowest priority in a bankruptcy proceeding? Senior debt Common stock Preferred stock Subordinated debenture
Common stock
Portfolio diversification eliminates which one of the following?
Company-specific risk
The beta of the risk free security is
0
Which of the following is an example of diversifiable risk?
A company's CEO being arrested for fraud (COMPANY SPECIFIC!)
Which one of the following portfolios will have a beta of zero? A portfolio that is equally as risky as the overall market A portfolio that consists of a single stock A portfolio comprised solely of U. S. Treasury bills No portfolio can have a beta of zero.
A portfolio comprised solely of U. S. Treasury bills
Insolvent Packing Company has just filed for bankruptcy and is going out of business. It has some valuable assets that were sold. Which of the following in the correct order for who receives the remaining assets of the company?
Bondholders first, then preferred stock then common stock.
An agent who buys and sells securities from inventory is called a
Dealer.
Which one of the following best describes systematic risk in owning the common stock of the Ford Motor Automobile company?
Lower interest rates leading to an increase in the stock market in general
Voting by proxy
Most shareholders do not vote in person and tell the company how they want their shares to be voted on their behalf.
Which of the following is the most correct answer for the beta of a portfolio of 35 stocks where the lowest beta for an individual security is 0.84 and the highest is 1.51?
The beta of the portfolio will be between 0.84 and 1.51.
An underpriced security is ___________ the security market line.
above
