Davidson; Management - 3rd Australasian Edition



1.
Which of the following is not an example of capital market securities?
A.
common stocks
B.
convertible bonds
C.
commercial paper
D.
mortgages


2.
All but one of the following is associated with characteristics of common stock?
A.
residual claim on income and assets
B.
proxy
C.
cumulative dividends
D.
dual-class stock


3.
Investors with 30 per cent of the voting stock of a corporation, interested in a seat on the board of directors, had better have __________ voting privileges.
A.
straight
B.
cumulative
C.
proxy
D.
limited


4.
The secondary markets for capital market securities have facilitated economic growth in our country because
a     they help provide marketability for capital market claims.
A.
they have increased investors' willingness to buy capital market claims.
B.
they make people more willing to invest because they can more easily diversify their risk.
C.
all of the above


5.
When constructing a stock market index, two items below are needed to start the index?
A.
the starting date and an estimate of future prices.
B.
the starting date and the base index value.
C.
the starting and ending date of the index.
D.
100 is the base value, combined with the starting date.


6.
The term shareholder equity implies
A.
a right to dividends.
B.
a contractual relationship with a corporation.
C.
an ownership claim.
D.
a prior claim on income and assets.


7.
All but one of the following are terms associated with common stock?
A.
share splits
B.
residual
C.
ownership
D.
limited liability


8.
Stocks with beta values of one
A.
will have very predictable rates of return.
B.
will have little risk compared to the market portfolio.
C.
has had price variability similar to the market.
D.
has had a constant rate of return.


9.
Regulators provide a valuable function for the capital markets because they
A.
try to keep the market participants honest.
B.
try to prevent excessive speculation from destabilizing the market.
C.
make sure all pertinent information about publicly traded securities is disclosed.
D.
all of the above


10.
A shareholder in a troubled corporation is not likely to lose his/her
A.
money invested in the stock.
B.
house.
C.
dividends declared)
D.
par value.


11.
The globalization of the equity markets has led to:
A.
Electronically linking equity dealer and exchange markets is slowly leading toward a national market system.
B.
Electronically linking international markets has created 24 hour trading opportunities for some stocks.
C.
U. S. stock exchanges have extended (after hours) their normal trading hours in which shares are traded electronically, linking U. S. with the hours of international markets.
D.
all of the above


12.
The sale of securities to the public via an investment banker by a new corporation raising funds is called
A.
a seasoned offering.
B.
a secondary offering.
C.
an initial public offering.
D.
a best efforts offering.


13.
Using the security market line, calculate the required rate of return on a stock when the risk-free rate is 7%, the return on the market portfolio is 15%, and the beta is 1.5?
A.
12 %
B.
19%
C.
29.5%
D.
33%


STOP This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test.