PF 7-3 The Nature of Stocks

A type of security that represents equity ownership in a company, and includes voting rights, is called:

• a government bond

• preferred stock

• a zero-coupon bond

• common stock

Companies sell common stock to investors to raise money in order to:

• fund its operations

• pay dividends

• pay interest

• issue shares

The primary reason investors like investing in common stocks is because of:

• interest

• a sense of ownership

• capital appreciation

• the coupon rate

The NYSE and Nasdaq are examples of:

• stock exchanges

• maturity dates

• bond portfolios

• bond ratings

When a company earns a profit a decides to distribute some of the profits to stockholders, they are paying:

• interest

• a dividend

• a coupon

• a par value

The type of equity security that offers a regular payout but has no voting rights is called:

• common stock

• a corporate bond

• preferred stock

• dividends

The number of shares held by investors is called:

• shares outstanding

• issued shares

• authorized shares

• treasury shares

Multiplying the shares outstanding by the current stock price equals:

• revenue

• market capitalization

• expenses

• income

Which investment is generally considered to by more volatile and risky?

• common stock

• preferred stock

• bonds

• CDs

A company has 200,000 shares outstanding and the current stock price $40. What is the market capitalization of the company?

• $800,000

• $8,000,000

• $280,000

• $200,000