B. TRUE OR FALSE: Write TRUE if the statement is correct; if incorrect, write FALSE. 1. Preferred stockholders get cash dividends before common stockholders. 2. A financial asset is any contract that reflects a residual stake in an entity's assets after all liabilities have been paid. 3. Interest rates on treasury bonds are often higher than those on corporate bonds. 4. A 10-year T-bond is a money market instrument. 5. A public offering is the selling of new securities to the general public, whereas an initial public offering (IPO) is the first issuance of shares. 6. Insurance companies pool payments and invest the proceeds in a variety of securities until funds are required to settle policyholder claims. 7. Financial markets give capital for financial managers to support business progress and development.

B. TRUE OR FALSE: Write TRUE if the statement is correct; if incorrect, write FALSE. 1. Preferred stockholders get cash dividends before common stockholders. 2. A financial asset is any contract that reflects a residual stake in an entity's assets after all liabilities have been paid. 3. Interest rates on treasury bonds are often higher than those on corporate bonds. 4. A 10-year T-bond is a money market instrument. 5. A public offering is the selling of new securities to the general public, whereas an initial public offering (IPO) is the first issuance of shares. 6. Insurance companies pool payments and invest the proceeds in a variety of securities until funds are required to settle policyholder claims. 7. Financial markets give capital for financial managers to support business progress and development.

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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In calculating earnings per share, a company uses the treasury stock method when a. it recognizes the assumed impact of exercising outstanding warrants. b. it develops a methodology to handle the premium paid on exercised share options. c. it needs to value the cash received for a convertible bond. d. it needs to value treasury stock repurchased during the year.
In what way is a preferred stock usually more similar to a bond than to a common stock? O a. Preferred stockholders are more risky than common stocks O b. Preferred stockholders elect the board of directors of the organization O c. Preferred bondholders participate in the growth of the company through increases in dividends and stock prices O d. Preferred stockholders are typical entitled fixed payments O e. If the company were to go into liquidation, preferred stockholders will be entitled to payments after common stockholders are paid-off
9. You have just purchased shares in the Hi-Tech Long-Term Bond Fund, a mutual fund that invests inlong-term corporate bonds. Your purchase constitutesa.A direct transfer of funds.b.An indirect transfer through an investment banker.c.An indirect transfer through a financial intermediary.d.A money market transaction.e.All of the above. 10. Which of the following statements is correct?a.The SEC must approve the price at which a stock is to be offered to the public when a company"goes public."b.If a company's stock is listed, then it trades in the over-the-counter (OTC) market.c.If the "preemptive right" exists in a company's charter, then the holders of its Class A shareshave the right to receive a specified amount of dividends before dividends can be paid on ClassB shares.d.A "prospectus" is a document which describes a company and the securities it plans to offer, andthe prospectus generally must be approved by the SEC before a public offering of new securitiescan be made.e.The…
Which one is correct answer please confirm? Studies analyzing the historical returns earned by common stock investors have found that the returns from average risk common stock investments over very long time periods have averaged approximately ____ percentage points ____ than holding period returns on corporate debt issues. a. 5.7; higher b. 5.7; lower c. 7.5; higher d. 7.5; lower
Which of the following statements is false? Group of answer choices Stocks are long-term securities issued by corporations. Common stock is the residual interest in the firm and gives the owner dividend rights, voting rights, liquidation rights, and preemptive rights. Common stock promises a dividend payment but usually does not give voting rights. Bonds are less risky than stocks.
If given the original value (par value) and market price (the price the bond sold for), how do youknow if the bond is being issued at a discount or a premium? 2. As an investor, would you want to buy a bond at a discount or premium? Explain the reasoningbehind your choice. 3. Explain how a company's Income Statement is affected by treasury stock transactions?
Which of the following statements about financial markets and securities are true? Most common stocks are traded over-the-counter, although the largest corporations have their shares traded at organized stock exchanges such as the Philippine Stock Exchange. A corporation acquires new funds only when its securities are sold in the primary market. Money market securities are usually more widely traded than longer-term securities and so tend to be more liquid. All of the choices are true.
Preferred stocks are characterized by all the following, except voting rights are generally not present and not given to the holders of these stocks the dividends declared for the investors of these stocks are tax deductible to the issuer warrants may be attached to these securities it may be convertible to ordinary or common stock Which of the following would best explain an increase in receivables turnover? The company adopted new credit policies last year and began offering credit to customers with weak credit histories. Due to problems with an error in its old credit scoring system, the company had accumulated a substantial amount of uncollectible accounts and wrote off a large amount of its receivables. To match the terms offered by its closest competitor, the company adopted new payment terms now requiring net payment within 30 days rather than 15 days, which had been its previous requirement.
Preferred stock is similar to a bond because: Group of answer choices it has a fixed amount to the investor. it represents an ownership interest. all of these. it has a maturity at which time the corporation repays par value.
(I) Firms issue common stock in far greater amounts than preferred stock.(II) In a given year, the total volume of stock issued is much less than the volume of bondsissued.a) (I) is true, (II) false.b) (I) is false, (II) true.c) Both are true.d) Both are false
Which of the following are differences between a bond and a common stock? (Select all that apply.) A. A corporation has to pay all bondholders before paying stockholders. B. A bond is a claim on the earnings and assets of a corporation, whereas a common stock promises to make periodic payments for a specified period of time. C. A corporation has to pay all stockholders before paying bondholders. D. A bond is a debt instrument that entitles the owner to receive periodic amounts of money until its maturity date, whereas a common stock represents a share of ownership of the institution that has issued the stock.
Which of the following is a difference between stocks and bonds? Select one: a. cash flows to bondholders are not known and not promised, cash flows to stockholders are known and promised b. companies issue stocks to grow the company and issue debt to pay bills c. required returns on debt are typically lower than required returns on equity d. dividends are legal obligations of the firm; coupons are not. Clear my choice

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