M Finance by Marcia Cornett, 4th Edition – Test Bank

M Finance by Marcia Cornett, 4th Edition-Test Bank

M: Finance, 4e (Cornett)
Chapter 8 Valuing Stocks

1) Which of these investors earn returns from receiving dividends and from stock price appreciation?
A) Bondholders
B) Stockholders
C) Investment bankers
D) Managers

2) As residual claimants, which of these investors claim any cash flows to the firm that remain after the firm pays all other claims?
A) creditors
B) bondholders
C) preferred stockholders
D) common stockholders

3) When residual cash flows are high, stock values will be:
A) unchanged.
B) low.
C) high.
D) unpredictable.

4) Trading at physical exchanges like the New York Stock Exchange and the American Stock Exchange takes place:
A) at dealers’ trading posts.
B) at brokers’ trading posts.
C) at dealers’ computers.
D) at market markers.

5) Why is the ask price higher than the bid price?
A) It represents the gain a market maker achieves.
B) It represents the gain the stock seller achieves.
C) It represents the gain the stock buy achieves.
D) It represents the gain all participants will achieve.

6) The Dow Jones Industrial Average (DJIA) includes:
A) all of the stock listed on the New York Stock Exchange.
B) 30 of the largest (market capitalization) and most active companies in the U.S. economy.
C) 500 firms that are the largest in their respective economic sectors.
D) 500 firms that are the largest as ranked by Fortune Magazine.
7) The Standard & Poor’s 500 Index includes:
A) all of the stock listed on the New York Stock Exchange.
B) 30 of the largest (market capitalization) and most active companies in the U.S. economy.
C) 500 firms that are the largest in their respective economic sectors.
D) 500 firms that are the largest as ranked by Fortune Magazine.
8) The NASDAQ Composite includes:
A) all of the stocks listed on the NASDAQ Stock Exchange.
B) 30 of the largest (market capitalization) and most active companies in the U.S. economy.
C) 500 firms that are the largest in their respective economic sectors.
D) 500 firms that are the largest as ranked by Fortune Magazine.

9) Which of the following will only be executed if the order’s price conditions are met?
A) A trade
B) A limit order
C) An unlimited order
D) A spread

10) Investors buy stock at the:
A) dealer price.
B) bid price.
C) quoted ask price.
D) broker price.