Economics Chapter 05

Equity financing is very important to corps who rely on selling stock to finance operations.

Many individuals and institutions invest in stocks

If the demand for a security falls, its price will rise.

A stock that entitles its owners to vote for candidates to the board of directors is called

An increase in the value of stocks is called

The price of a bond tends to fall if

Businesses need money to

Firms that buy and sell securities on behalf of their clients for a commission are called

If few people want to sell a security, the short supply will push prices up.

Which of the following is not true about the Securities and Exchange Commission?

Security markets exist for which of the following reasons?

A written promise to repay a loan, plus interest, at a specified date is called a

A report that provides a "snapshot" picture of a business at a particular point in time is a

Speculators who anticipate that the price of a stock will soon fall are called

Which of the following is the equation for net worth?

Financial statements always reflect the changing value of money that results from inflation.

The price at which a security is bought/sold depends on the supply/demand for that security.

Holders of preferred stock can vote for members of the board of directors of a corporation.

Bonds considered very high risk investments that offer extremely high interest rates are called

The difference between what a firm owns and what it owes is called

Brokers act as intermediaries between bulls and bears and earn a commissions for transactions.

A loan arrangement in which a bank allows a business to borrow money whenever it needs it is a

Members of nearly half of all households in the United States own stock.

When a customer places an order for a stock listed on an exchange, it is bought by

The issuing of dividends by corporations is more common today than it once was.

The stock exchange that used to be known as the "Curb Exchange" until 1953 is the

If a price of a security falls, and bullish investors sell, they will

If a corporation fails, preferred stockholders share assets before common stockholders.

Many Americans who have insurance policies or pension funds own stock indirectly.

The Federal Reserve Board sets the margin that securities buyers must put up in cash.

The interest paid on newly issued bonds reflects

Debt security instruments used by a corporation and sold to investors are called

Some of the data in financial statements may be based on opinion rather than fact.

Loans and other financial strategies that are made for periods of a year or more are called

Retained earnings are

The price of a bond is chiefly influenced by

The figure on a balance sheet that shows what a firm would be worth if it were liquidated is

The ups and downs of the stock market often mirror how investors view economic conditions.

 None of the $ that changes hands after the 1st sale goes to the corp that issued the security.

Places where shares in the nation's major corporations are bought and sold are called

Stock prices rise when the public is feeling good about the future.

Like stocks, corporate bonds are usually bought and sold through brokers.

Money is called the "lifeblood of business" because

Stocks increase in value if

If inventory is valued at a higher price than it is really worth, it makes the firm appear to

People may purchase stocks partly on credit, and this is called

Loans that need to be repaid in less than one year are referred to as

The price of a bond is determined by

A part of a corporation's profits that it may distribute to shareholders each year is called

Equity financing is very important to people who buy and sell shares of stock.

Speculators who believe that the price of a stock will rise are called

Financial statements are a forecast of future events.

America's oldest stock exchange is the

The principle which suggest that individual investors should decide which securities to buy is

Anything owned by a business that has money value is called a(n)

The practice of bulls buying stocks low and hoping to sell it later at a higher price is called

The main purpose of an income statement is to show profitability of a company by

The securities of the nation's largest corporations are generally traded on stock exchanges.

A payment delay granted to one firm by another firm is called

A general rise in stock prices is known as a

People who buy stock in the hope of turning a quick profit are called

If the demand for the security rises, its price will fall.

Similar to securities exchanges, markets also exist for buying and selling commodities.

Bonds issued by all levels of government (federal, state, and local) are called

If many people want to sell a security, the oversupply will push prices down.

The quantity of finished goods on hand and the materials used in their manufacture is called

Reports that provide financial info about a company whose securities are traded on an exchange

People who buy and sell stocks for dividends and capital growth are called

A statement that summarizes the financial activities of a firm over a period of time is a(n)

There is a need for securities markets in which stocks and bonds may be sold.

 Shares of stock entitled to a fixed dividend before profits go to common stockholders are

Insider trading occurs when individuals with info about a company buy/sell its securities

Owner's equity is another name for

If a corporation is dissolved, holders of common stock would receive nothing.

Debts or other financial obligations of a company are called

Cumulative preferred stockholders are guaranteed dividends before common stockholders.

People who buy stocks and bonds from investment banks can sell them at any time.

America's newest stock exchange that was established in 1971 is the

Which of the following is true about investment banks?

Preferred stockholders are entitled to fixed dividends whenever the board of directors pays it.

Bonds are always safer investments than stocks.

The SEC requires publicly owned companies to publish certain financial statements.

Holders of common stock are not entitled to receive dividends.

A report that describes the operations of a company that is issuing new securities is called

The sale by a corporation of shares of its stock as a means of raising capital is called

Equity financing is the most important source of raising money by corporations.

A loan granted to a business with a repayment of a year or greater is called a

Stock ownership in the United States is confined to the wealthy.

Income from the goods or services that a firm sells is called

Which of the following is not true about corporate bonds?

Both the issuing corporation and the initial underwriter

A promise by a corporation or government to repay a specified sum along with annual interest is

Insurance companies and pension funds invest in securities to build up their monetary reserves.

When revenues are not sufficient to meet a firm's needs, a firm can

In order to profit on their prediction, bears sell the stock "short."

The value of a stock is fixed by the corporation that issues it.

For every bull who is buying, there must be a bear who is selling.

The face value of a loan is called

Any item of value that the lender may seize if the borrowert does not make loan payments is

Common stockholders can't receive dividends until preferred stockholders receive dividends.