Activity 9 - Overview of Cap Market - Long term financing

Which of the following best describes a capital market?

• A market where only government bonds are traded

• A market where long-term debt and equity securities are bought and sold

• A market for short-term financial instruments only

• A market for commodities like wheat and oil

Which of the following is NOT a type of bond?

• Corporate bond

• Municipal bond

• Preferred bond

• Government bond

What is a key feature of preferred shares?

• They always have voting rights

• They pay fixed dividends before common shares

• They are only issued by the government

• They cannot be traded on the stock exchange

Which of the following is a characteristic of common shares?

• Guaranteed fixed dividend payments

• Priority over bondholders in case of bankruptcy

• Voting rights at shareholders’ meetings

• Cannot be traded on public exchanges

Which formula correctly calculates Return on Investment (ROI)?

Which of the following best describes a bond?

• An ownership share in a company

• A loan made by an investor to a borrower

• A type of mutual fund

• A commodity contract

Which type of bond is issued by the federal government of Canada?

• Corporate bond

• Municipal bond

• Government of Canada bond

• Convertible bond

What is the main difference between preferred shares and common shares?

• Preferred shares have higher risk than common shares

• Preferred shares usually do not have voting rights, but have priority in dividends

• Common shares are not traded on stock exchanges

• Common shares receive dividends before preferred shares

Which of the following is a benefit of investing in common shares?

• Guaranteed return of principal

• Fixed interest payments

• Potential for capital gains and voting rights

• Priority in bankruptcy over bondholders

• 3%

• 6%

• 12%

• 15%