BME4-QUIZ#3

What is the purpose of bonds?

• To buy stocks in a company

• To borrow money from investors

• To sell goods and services

• To issue dividends to shareholders

Which statement describes government bonds?

• They are issued by private corporations.

• They are a long-term debt of a firm.

• They finance the activities of the government.

• They have a fixed interest rate.

What are corporate bonds used for?

• Financing short-term projects

• Funding government activities

• Investing in stocks

• Financing long-term funding requirements

Why do bondholders have no vote and no influence on the management of the firm?

• Because bondholders have no interest in the company's operations.

• Because bondholders only focus on earning fixed interest payments.

• Because bondholders prioritize the repayment of principal over management influence.

• Because bondholders are not allowed to participate in shareholder meetings.

How does an investment banker assist in the issuance of corporate bonds through a public offering?

• By determining the size of the issue and the type of bonds to be issued

• By tailoring the bond issue to fit the needs of the issuing firm and the investing firm

• By conducting a private agreement between the issuing company and the financial institution

• By establishing the selling price and selling the bond issue

Why are there no underwriting fees paid by the issuing firm in a private placement of corporate bonds?

• Because the issue does not have to be registered with regulatory authorities

• Because the investment banker provides assistance in determining the size of the issue

• Because the private placement allows for public examination of the bond issue

• Because the private placement involves selling bonds directly to the general public

How is trading primarily conducted in the bond market?

• Through online platforms and mobile applications

• Through centralized stock exchanges

• Through over-the-counter transactions

• Through direct negotiation between buyers and sellers

Why is the mortgage market considered a part of the capital market?

• Because it deals with loans on residential, commercial, and industrial real estate

• Because it primarily focuses on short-term funds

• Because it involves trading common and preferred stocks

• Because it facilitates the issuance of debt instruments

Why is an operating lease sometimes called a service lease?

• Because it requires the lessor to provide regular maintenance and repair services for the leased asset

• Because it allows the lessee to use the asset for a specific period of time

• Because it is a non-cancelable document that obligates the lessee to provide period rental payments

• Because it involves selling an asset to another firm and then leasing it back

How does a sale and leaseback arrangement work?

• The lessor provides regular maintenance and repair services for the leased asset

• The lessee is obligated to provide period rental payments during the basic lease term

• The firm sells an asset it owns to another firm, then leases it back from the new owner

• The expenses associated with the asset are covered by the lessor under a net lease agreement