Question

that the price is guaranteed to the selling firm is 1) The process of selling a new issue of securities so that the price is guaran referred to as: a) underwriting, b) best efforts. c) hypothecation. d) street name registration. e) All of the above involve a price guarantee 2) The dividend discount model assumes that: a) the dividend payout ratio will remain constant. b) the dividend growth rate is equal to the discount rate. c) discount rate increases at a constant rate. d) at least one dividend will be paid in the future. e) the dividend payout ratio increases at a constant rate. 3) When a group of underwriters jointly work together to sell a new issue of securities, the underwriters form a(n): a) underwriting cartel. b) market union. c) syndicate d) venture capital association. e) Dutch market. 4) What is the percentage of a firm's net income which is reinvested in the firm to support future growth called? a) payout ratio b) distribution percentage c) equity ratio d) equity reinvestment e) retention ratio 5) Which one of the following best describes a broker? a) trader who buys and sells from his or her inventory b) intermediary who arranges trades between a buyer and a seller c) firm which charges a commission for arranging a transaction d) person who buys securities for his or her own account on an exchange floor e) trader who transacts business on behalf of a securities issuer 6) William just placed an order with his broker to purchase 500 of the outstanding shares of Cor X. This purchase will occur in which one of the following markets? a) third b) fourth c) fifth d) primary e) secondary

Answer 1

1. A   underwriting

2. E    dividend payout ratio increases at a constant rate

3.C    syndicate

4.E    retention ratio

5.B    intermediary who arranges trade between seller and buyer

6.E secondary market