Week 10 the Prime Rate Is the Highest Rate Charged

1. The prime rate is the highest rate charged by a bank for a short- term loan.

F

2. Short- term financing

E) All of these are good answers.

3. Financial mangers must

D) ensure that funds are available for a repayment of debt.

4. A 2 for 1 stock split means that stockholders now own double the number of shares; however, the value of their stock remains the same in the market.

T

5. Equity capital comes from short- term borrowing.

F

6. Which of the following statements is true about insider trading?

D) All of the above

7. Which of the following factors typically does Not affect the market value of a company’s bonds that have sold into the secondary market?

B) The nature of its products

8. An advantage of equity financing is

B) the company doesn’t have to pay interest on the capital raised by selling stock

9. Stock and bonds issued for the first time by a company to raise money are sold in to secondary market.

F

10. The over- the- counter (OTC) market is driven primarily through an electronic market called the NASDAQ.

T

11. Which of the following stock values would be the most important to you if you want to estimate other buyers’ willingness to invest in a company?

D) Market value

12. A____________ is the market where securities are sold for the first time t raise money for the company.

A) primary market

13. A blue chip stock’ is one issued by a well- established, financially sound firm.

T

14. Retained earnings are undistributed profits of the corporation.

T

15. The FTC is the federal agency responsible for enforcing U.S securities regulations.

F

16. A stockholder is best understood to be a(n) ____________________.

D) none of the above

17. A(n) ___________ occurs when a corporation sells common stock to the general public for the first time.

D) initial public offering

18. The Rule of 72 pertains to

B) A GAAPs requirement for setting up an LLC....