Which of the following is NOT money market security? A. Bankers acceptance B. Treasury notes| C. Federal funds D. Eurodollars and Eurodollar CD's
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- A) Which of the following is not the function of the secondary market Select one: a. Marketability to securities b. Liquidity of securities c. None of these d. It gurantees fixed rate of return to the investor B) Which of the following are short-term financial instruments? Select one: a. Share of Rysut cement b. None of these c. A bond with five years maturity d. A banker’s acceptance C) money market does not have any role in the development of capital market a. True b. FalseWhat is the relationship between the expected return of a stock and its fair expected return? When is a stock underpriced, overpriced, or fairly priced? Explain what happens to the firm’s cost of equity, cost of debt, and cost of capital when the firm increases the amount of debt in its capital structure. Assume all Modigliani and Miller assumptions hold and that there are no taxes. How can we use the internal rate of return to evaluate whether we should pursue a specific project? Should we pursue a project when the cost of capital is higher than the internal rate of return?Which of the following statements are TRUE about investing in securities on margin? I. Investors short sell when they are bearish. II. Losses are limited when short-selling. III. Losses are limited when buying on margin. IV. Dividend payments constitute a cash inflow for the short-seller.
- Preferred stock is the least used of all long-term securities because A) investors can get higher returns after taxes in other investments. B) preferred dividends are considered regular (fixed) obligations but are not tax-deductible. C) flotation costs are extremely high compared to bonds. D) all of these.2. Which of the following is a characteristic of preferred stock?A. Give voting rights to its owner.B. It is like annuity.C. Investors cannot force the payment of the dividend.D. Dividends are tax-deductible for the firm as opposed to interest payment.You buy a stock from the capital market. If the capital market is semi-strong efficient, which of the following statements is NOT correct? a. You cannot earn any abnormal returns above the required return by trading on public information. b. Past stock prices can be used to predict future stock prices. c. The technical analysis of publicly available information will not lead to any abnormal returns. d. The stock is fairly priced. e. Stock prices reflect all publicly available information.
- a. What is the relationship between the expected return of a stock and its fair expected return? When is a stock underpriced, overpriced, or fairly priced? b. Explain what happens to the firm’s cost of equity, cost of debt, and cost of capital when the firm increases the amount of debt in its capital structure. Assume all Modigliani and Miller assumptions hold and that there are no taxes. c. How can we use the internal rate of return to evaluate whether we should pursue a specific project? Should we pursue a project when the cost of capital is higher than the internal rate of return?explain the statement"The money market is neccessary but not sufficinet for the liduiidity of securities on the stock market"Jana’s preferred stock is riskier to investors thanits debt, yet the preferred stock’s yield to investors is lower than the yield to maturity on thedebt. Does this suggest that you have made amistake? (Hint: Think about taxes.)
- Which of the following is true with Primary Market? Select one: a. None of the options b. Provides liquidity for instruments which are already issued by companies c. Deals with old stocks issued by companies d. Increases risk e. Needs fixed place for trading Which of the following is not a financial instrument? Select one: a. Merchant bankers b. Mutual Fund Companies c. All the options d. Banks e. Leasing CompaniesWhich of the following about Treasuy inflation protected securities is NOT true: O Treasury security that is indexed to inflationO Protect investors from the negative effects of inflationO Considered a low-risk investmentO Traded in money marketExplain the statement “The money market is necessary but not sufficient for the liquidity of securities on the stock market”