Which of the following statement is true? ( a. In brokered markets, buyers and sellers confront each other directly and bargain over price. b. Primary market is the market for trading outstanding securities. c. Preference shareholders have a higher priority claim on company's assets than ordinary shareholders in the event of insolvency. d. Ordinary shareholders receive fixed dividend payments.

Which of the following statement is true? ( a. In brokered markets, buyers and sellers confront each other directly and bargain over price. b. Primary market is the market for trading outstanding securities. c. Preference shareholders have a higher priority claim on company's assets than ordinary shareholders in the event of insolvency. d. Ordinary shareholders receive fixed dividend payments.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter13: Marketable Securities And Derivatives

Section: Chapter Questions

Problem 12E

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Which of the following statement is true? a. In brokered markets, buyers and sellers confront each other directly and bargain over price. b. Primary market is the market for trading outstanding securities. c. Preference shareholders have a higher priority claim on company’s assets than ordinary shareholders in the event of insolvency. d. Ordinary shareholders receive fixed dividend payments.
Which of the following is an appropriate goal for the firm? Select one: a. All of these b. In secondary markets, outstanding shares of stock are bought and sold among investors. c. An active secondary market causes firms to sell their new debt or equity issues at a higher cost of funds. d. A secondary market allows investors to share their risk and return e. For an investor, the function of secondary markets is to provide profitability for the shares of securities they own.
Indicate whether the following statements are (True) or (False) and correct the false statements: Primary and secondary markets are markets for short-term and long-term securities, respectively. Public offering is the sale of a new security issue, typically bonds or preferred stock, directly to an investor or group of investors. When considering each financial decision alternative or possible action in terms of its impact on the share price of the firm's stock, financial managers should accept only those actions that are expected to increase the firm's profitability.
For investors, the function of secondary markets is to provide marketability for the shares of securities they own at a fair price. Select one : a . True b . False
Which of the following is correct a. In a leveraged recapitalization, a firm uses its excess cash to buyback shares b. In an LBO, a firm borrows and repurchases its shares thereby reducng the number of shares outstanding. c. In a leveraged recapitalization, a change of ownership occurs as the firm is sold d. In an LBO, debt is a major component of the financing and a change of control occurs. e. In an LBO, managers use excess cash to repurchase shares
Secondary Market can be best described in which of the following statement? a. It is a market for an unlisted company to raise equity capital. b. It is a market where securities are issued through private placement. c. It is a market in which short-term money market instruments such as Treasury bills are traded. d. It is a market in which preowned securities are traded.
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.
Dividend revenue is recognized for trading securities and available for sale securities even if held at FVOCI. Gain on sale is the excess of the net selling price over the cost of the securities sold which is reported to profit or loss whether trading or available for sale securities held at FVOCI. a. Only the first statement is correct. b. Only the second statement is correct. c. Both statements are correct. d. Both statements are incorrect.
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.
Which of the following statements is false? A. Mutual funds are pool investor funds to purchase financial instruments and thus reduce risks through diversification. B. Initial public offering (IPO) occurs when firm issues stock in the public market for the first time. C. The difference between current assets and non-current assets equals to working capital. D. Owner’s equity is the residual interest in assets that remains after subtracting an entity’s liabilities.
1. When the effective cost of debt is greater its the nominal cost,a. the initial net measurement of the bond is more than the face value.b. The net proceeds is more than the face value.c. The entity records a discount on the bond payable.d. The interest expense is less than the interest payments.2. Which of these statement are true? [S1] The dividend decision generally involves the same factors as the earnings retention decision. [S2] Under the Dividend Relevance Theory, dividends are valued more than capital gains.3. The cost of retained earnings is less than the cost of ordinary shares because ofa. the issuance cost.b. the trust fund doctrine.c. agency costs of free cash flow.d. the taxation on earnings.4. GHI Corp., a new and relatively unknown entity, has issued 5-year bonds with an interest rate of 30%. These may also be traded in by the holder for 5 ordinary shares for every P1,000 face value of the bond. GHI added this feature so that once it has better profits, it can entice…
1)Which of theAllowing is an advantage for a firm to issue common stock over long-term debt? 1 point A) the cost of equity financing being less than the cost of debt financing B) the primary claim of equityholders on income and assets in the event of liquidation C) no maturity date on which the par value of the issue must be repaid D) the tax deductibility of dividends which lowers the cost of equity financing 2) Which of the following is a difference between common stock and bonds? 1 point A) Bondholders have a voice in management; common stockholders do not. B) Bondholders have a senior claim on assets and income relative to stockholders. C) Stocks have a stated maturity but bonds do not. D) Dividend paid to stockholders is tax-deductible but interest paid to bondholders are not 3) Holders of equity capital ________. 1 point A) own the firm B) receive interest payments C) receive guaranteed income D) have loaned money to the firm 4)Because equityholders are the last to receive any…