Multiple Choice Questions:
1. A firm can acquire financial resources through?
a. Retained earnings.
b. Selling stocks.
c. Issuing bonds.
d. All of the above.
2. You could invest your savings in?
a. Treasury bills
b. Mutual funds.
c. Bank deposits.
d. Stocks and bonds.
e. Any of the above.
3. Which of the following entities do not hold corporate stocks?
a. University and non-profit foundation endowment funds
b. Insurance companies
c. Other corporations
d. Pension funds
e. All of the above entities hold corporate stocks.
4. Owners of stock in U.S. corporations include?
a. Pension funds.
b. Insurance companies.
c. Mutual funds.
d. All of the above.
5. Preferred stockholders?
a. Assume greater risks than do common stockholders.
b. Receive payment before common stockholders in the event of liquidation.
c. Receive payment before bondholders in the event of liquidation.
d. Are characterized by all of the above.
6. Ownership of a share of stock in a corporation is different from ownership of a corporate bond in that?
a. The owner of a share of stock receives payment before a bondholder in the event of a corporation’s liquidation.
b. A bondholder receives a fixed interest payment plus a lump sum payment at maturity, whereas a stockholder may
receive income in the form of dividends and capital gains.
c. A bondholder has voting rights, a shareholder does not.
d. A bondholder bears greater business risk than does a shareholder.
7. Corporations can finance their growth?
a. By issuing bonds.
b. By issuing new shares of stock.
c. Through plowbacks.
d. By all of the above.
e. By either a or b.
8. Stock prices are influenced by?
a. Concern over inflation.
b. The economic policies of the government.
c. Business conditions in foreign economies.
d. Expectations about corporate earnings.
e. All of the above.