10. This refers to the process where the issuer directly sold the bonds only to qualified investors such as insurance firms, mutual fund companies, large firms, etc. a. Direct loans b. Public offering c. Private placement

10. This refers to the process where the issuer directly sold the bonds only to qualified investors such as insurance firms, mutual fund companies, large firms, etc. a. Direct loans b. Public offering c. Private placement

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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10. This refers to the process where the issuer directly sold the bonds only
to qualified investors such as insurance firms, mutual fund companies,
large firms, etc.
a. Direct loans
b. Public offering
c. Private placement
d. Private bidding and syndication
e. None of the above

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20. Under PFRS9, investment in equity securities not held for trading are classified as: * a. FVPL b. Either FVPL or FVOCI, depending on the entity’s business model c. FVOCI, if the entity opted to carry as FVOCI, otherwise, carried as d. FVPL FVOCI
Which of the following is not a dominant risk that might affect the price of a bond? A Deferred interest B Board of Directors’ approval of CEO purchase of corporate jet C Step-up D Payment-in-kind
6. Which of the following is true of secondary securities? a) They include equities, bonds, and other debt claimsb) They are backed by the real assets of corporations issuing them c) They are securities that back primary securitiesd) They are securities issued by FIs
Which of the following statements is NOT true of PIPE transactions? In a PIPE transaction, investors purchase securities (equity or debt) directly from a publicly traded company in a private placement. PIPE transaction gives issuers faster access to capital. The securities are virtually always sold to the investors at a discount to the price at which they would sell in the public markets. PIPE transactions are registered with the SEC.
Which of the following statements correctly describe characteristics of preference shares? Group of answer choices A. The required return on preference equity is expected to be less than the required return from ordinary equity. B. None of the other statements are correct C. A participating preference share participates in the interest payments paid to debtholders. D. Preference shares are called “hybrid” securities because they display characteristics of both short-term and long-term debt.
Which of the following statements is not true of the fair-value method of accounting for marketable securities? Select one: A. The investment account is recorded at current fair value on the balance sheet. B. Interim changes in the investments’ fair value may or may not affect income depending on the securities’ classification. C. This method is used when the reporting company generally owns less than 20% of the investee company. D. Dividends are treated as a return of the capital invested. E. None of the above
4. Investments in debt securities include all of the following, except for a. U.S. treasury securitiesb. corporate bondsc. preferred stocks that are redeemable at the option of the issuerd. commercial paper
Which of the following is not a capital market instrument? a. Corporate stock b. Mortgages c. Corporate bonds d. Repurchase agreement
Which of the following is a disadvantage to a corporation issuing bonds? Group of answer choices A)The required interest payment must be met each period. B)The liquid nature of the bonds makes them attractive to investors who may not want to hold them to maturity. c)The large principal payment due at maturity. d)Both the first and third answers above are both disadvantages. e)The first, second and third answers above are all disadvantages.
Which of the following is correct? A. Bonds maturing at a specified single date are called ordinary bonds. B. Equity securities and debt securities differ only in their effect on a company’s cash flow. C. One purpose in holding bonds as a long-term investment is to provide the investor a voting voice in the management of the issuing company. C. On bonds, the yield rate and the nominal rate of interest are always different.
_____________________________ are issued certificates, where big corporations or governments act as the borrower and general public acts as the lender (i.e. creditor). Select one: A. None of the given options B. Bonds C. Equity D. Preference Shares
According to IFRS 9, explain how Lawson should deal with (i) the expected credit loss and (ii) the interest revenue in respect of the above mentioned bond investment held by Martin Company.

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