2. Statement 1: Debt securities represent ownership in a firm that would entitle the holders certaindividends and claims in a firm.Statement 2: Equity securities are loans made by the issuing firm that wouldentitle the holderscertain interest andmaturity value.Statement 3: Debt securities include bonds, certificates of deposits, promissorynotes, governmentnotes and bills.Statement 4: Equity securities include preferred and common stocks.Statement 5: Derivative securities include instruments whose underlying assets are bonds, stocks,commodities, currencies, interest rates and other assets.a. All statements are true b.Statements 1, 2 and 3 are true c.Statements 2, 3 and 4 are trued.Statements 3, 4 and 5 are true e.Statements 1,3 and 5 are true f. Statements 2, 4 and 5 are true 3. Whichis correct about financial securities?a. Financial securities guarantees retum to investors.b. Financial securities eliminate risk that most financial managers are facing.c. Diversification spreads risk and improves expected total retum.d. Financial securities protect investors againstriskshocks brought by s ocial, economic, andpoliticalevents.e. All of the abovef. None of the above

Step 1 As their multiple questions are given, we do only first question.

Answered: dividends and claims in a firm…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 28RQSC

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Similar questions

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.
1. Investments in debt and equity securities that are held for current resale by banks and stockbrokerage firms are termed a. available-for-sale securitiesb. trading securitiesc. held-to-maturity securitiesd. marketable securities
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 instrument are traded in capital market. check all that apply A. commercial paper b. treasury bills c. cooperate bonds d. bankers appectances e. common stock
Which of the following can be categorized as Long term sources of finance ? i Equity Shares ii Trade Credit iii Debenture iv Money Market Instruments a. Both Money Market Instruments and Trade Credit b. Both Equity Shares and Debentures c. Only Equity Shares d. Only Money Market Instruments
Which of the following factors are included in the rating analysis of a corporate bond? I. the issue's indenture provisions II. the liquidity position of the issuing company III. the issuing company's relative debt burden IV. the stability of the company's earnings Question content area bottom A. I and II only B. I, II and III only C. II, III and IV only D. I, II, III and IV
Distinguish the following financial markets. Provide examples of the type and/or nature of the securities traded in the market. Debt v/s Equity Market
Equity instruments include all of the following, except * A. Preference shares B. Corporate bonds and other debt instruments issued by the entity. C. Ordinary shares D. Warrants or options that allow the holder to purchase a fixed number of ordinary shares of the issuing entity in exchange for a fixed amount of cash or another financial asset.
Discuss and explain three reasons that companies invest in debt and equity securities.
Indicate whether the following instruments are examples of money market or capital marketsecurities.a. U.S. Treasury billsb. Long-term corporate bondsc. Common stocksd. Preferred stockse. Dealer commercial paper
Which of the following can be categorized as Short term sources of finance ?i Equity Sharesii Trade Creditiii Debentureiv Money Market Instruments a.Only Equity Shares b.Both Equity Shares and Debentures c.Only Money Market Instruments d.Both Money Market Instruments and Trade Credit
Which of the following is the basis for fixing the price of securities in the financial market? a. Government b. Demand and Supply in the Market c. Seller of the Financial Instrument d. The issuer of the Instruments

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