CH7&8 quiz

Which of the following is not a characteristic of common stock?

• A. Ownership in the company

• B. Fixed maturity date

• C. Not guaranteed cash flows

• D. Voting rights

Common shareholders have a residual claim on:

• A. Preferred dividends

• B. Bond interest payments

• C. Assets and cash flow after liabilities

• D. Company taxes

Which statement about voting rights is true?

• A. All stocks have equal voting rights

• B. One vote per share is standard

• C. Non-voting shares are illegal

• D. Super voting rights reduce shareholder power

Dividends received by shareholders are:

• A. Tax-deductible for the company

• B. Not taxable for the recipient

• C. Treated as taxable income

• D. Paid before bond interest

Treasury stock refers to:

• A. Government-owned stock

• B. Stock held by foreign investors

• C. Shares repurchased and held by the issuing company

• D. Preferred stock

What distinguishes a primary market from a secondary market?

• A. Primary markets are for bond trading

• B. Primary markets involve trading among investors

• C. Secondary markets are not regulated

• D. Primary markets involve the issuing firm

Which of the following is a secondary market in the U.S.?

• IPO platform

• NYSE

• SEC

• Federal Reserve

A bear market is typically associated with:

• Rising stock prices

• Falling stock prices

• New IPOs

• Stable interest rates

Preferred stock dividends are typically:

• Variable

• Guaranteed by the government

• Constant

• Paid after common stock

What is the formula for calculating the dollar profit or loss on an investment?

• Ending Value - Distributions + Original Cost

• Ending Value + Distributions - Original Cost

• Ending Value - Original Cost / Distributions

• Ending Value - Original Cost × Distributions