1. The difference between the selling price to the public of a new issue and the net the issuing firm actually receives is known as the

a. sec cost

b. bid spread

c. underwriting spread

d.negotiationspread

2. Which of the following statements about common stock voting is/are correct?

1.Majority voting typically prohibits a group of stockholders with a minority viewpoint from having any representation on the board.

2. Cumulative voting allows each share of stock to represent as many votes as there are directors to beelected.

a. Only 2 is correct

b. Both 1 and 2are correct

c. Neither 1 and 2 are correct

d. Only 1 is correct

3. Of the following common stock rights, which allows common stockholders to buy more shares of common stock in order to retain their pro-rata share of ownership in the company?

a.preemptive rights

b. dividend rights

c. voting rights

d. asset rights

4. All of the following statements about common stock are correct EXCEPT:

a.common stockholders have preemptive rights

b.common stock prices fluctuate more than bonds.

c.common stock is a variable income security.

d.common stock is callable.

5. TheP/Eratioindicates

a.thecurrentyield

b. the current price

c. how risky the stock is

d. how much investors are willing to pay for $1 of current earnings

6. Stock splits are:

a. sign that the company is in need of more financial capital

b. a sign that the company wants to get its stock price to a more desirable trading level.

c. a sign that the company's stock price is too low.

d. a sign that the company cannot pay its stock dividend.