#2 QUESTION 2Which of the following is/are CORRECT regarding stocks? Select all that apply.In an efficient stock market, it should be easy to make money trading by locating misvalued stocks.OBondholders are the residual claimants of corporations' cash flows.O Stocks are typically riskier investments compared to bonds.A company issuing shares in the public equity market for the very first time is referred to as an IPO.O Stocks with high valuation multiples are referred to as "value stocks".

In the given question we need to select the statements which are correct regarding stocks.

Which of the following is/are CORRECT regarding stocks? Select all that apply. OIn an efficient stock market, it should be easy to make money trading by locating misvalued stocks. Bondholders are the residual claimants of corporations' cash flows. Stocks are typically riskier investments compared to bonds. A company issuing shares in the public equity market for the very first time is referred to as an IPO. Stocks with high valuation multiples are referred to as "value stocks".

Which of the following is/are CORRECT regarding stocks? Select all that apply. OIn an efficient stock market, it should be easy to make money trading by locating misvalued stocks. Bondholders are the residual claimants of corporations' cash flows. Stocks are typically riskier investments compared to bonds. A company issuing shares in the public equity market for the very first time is referred to as an IPO. Stocks with high valuation multiples are referred to as "value stocks".

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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(please correct and incorrect option explain and correct answer) Which of the following statements is most correct? Group of answer choices Money market transactions include common stock transactions. Preferred stockholders are paid before bondholders but after common stockholders. One of the problems in corporations is that managers often put their own interests ahead of those of the stockholders. U.S. T-bills are considered risky securities. None of the above statements is correct.
1. Choose the best definition for a Stock? A. Being a creditor to a company B. Robin Hood C. Ownership shares of a company D. Voting shares in a company E. Ownership shares of a public company 2. When investing in stocks, there are two ways in which you can have a positive return. What are the components of this return called? A. Dividends and Capital Loss B. Robin Hood C. Coupon and Capital Gains D. Coupon and Capital Loss E. Dividends and Capital Gains
Which of the following statements is true? Group of answer choices a. Dividend payments are attractive to executives who hold many executive stock options that were awarded to them by their firms b.Executives and other insiders benefit most by being able to tender their shares in an open market repurchase since they usually are privy to information that is not available to the general public c.Empirical research suggests that small, retail investors prefer stock repurchases to dividend payments d. a firm does not pay dividends, some institutional investors are prohibited from investing it the firmʹs equity
Which of the following statements is NOT true? A. Stock owners benefit from stock price increases B. Higher stock prices allow companies access to more capital C. Common stocks are not securities D. Stock prices tend to be very volatile
Which of the following statements is most correct? Group of answer choices Money market transactions include common stock transactions. Preferred stockholders are paid before bondholders but after common stockholders. One of the problems in corporations is that managers often put their own interests ahead of those of the stockholders. U.S. T-bills are considered risky securities. None of the above statements is correct.
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.
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
2 D )When financial markets are semi-strong form efficient, then: Traders can earn exceptional profits using publicly available information. Stock analysts have a trading advantage because of their access to vast amounts of public information. Company insiders can profit based on the inside information. Individuals can identify mispriced stocks using publicly available information
A firm with excess cash and few investment alternatives might logically A. repurchase some of its own shares. B. declare a stock dividend. C. choose to issue preferred stock. D. split its stock two-for-one.
1. Suppose many investors are still interested in acquiring the shares of Company ABC after the initial public offering, what kind of Financial market should they go to from whom would they purchase this shares? 2. What would happen if there are no Financial market in the Financial system?
Q1 Which one of the followings is least important for dividend decisions A. Attract institutional investors B. Stability of future earnings C. Flotation cost of issuing new equity D. Maintaining consistency with historic dividend policy F. A sustainable change in earnings Q2 With a right offerings, each shareholder is issued an obligation to buy a specified number of new shares from the firm at a specified price within a specified time, after which the rights expire. True False
A. Stockholders can transfer wealth from bondholders. As a finance analyst, you are required to explain how the following actions by stockholders transfer wealth from bondholders. Again, in what ways can the bondholders protect themselves against these actions?i. An increase in dividendsii. A leveraged buyoutiii. Acquiring a risky business B. Why might the two (2) disciplinary mechanisms of shareholders against managers not work? C. Union Pacific Rail road reported net income of $770million after interest expenses of $320 million in a recent financial year. The corporate tax rate was 36%. It reported depreciation of $960 million in that year, and capital spending of $1.2billion. The firm also had $4billion in debt outstanding on the books, was rated AA (carrying a yield to maturity of 8%), and was trading at par (up from $3.8 billion at the end of the previous year). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book…

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