MGT 101- Final Exam with Complete
Solutions
The first electronic exchange, where investors can buy and sell stock, is the _______. -
ANS-NASDAQ
In order to reduce her investment risk, Madison owns stock in several different
companies, both large and small. She has also invested in some mutual funds and
owns both corporate and municipal bonds. This approach is referred to as _______ -
ANS-diversification
The legal contract between a bond issuer and the purchaser of the bond that specifies
the terms of the bond is referred to as the _______ - ANS-bond indenture
Jada consults a new stockbroker who recommends that a sound investment strategy
would be to subtract her age from 100 and invest that portion of her portfolio in stocks,
and the balance in bonds. This is an example of _______ - ANS-asset allocation
A payment to shareholders from a company's earnings is known as _______ - ANS-a
dividend
A prolonged time period in which stock prices fall and investors appear to lose faith in
the market as a whole is referred to as a(n) _______ market - ANS-bear
The amount of the bond that must be repaid to the bondholder on the maturity date of
the bond is known as its _______ - ANS-face value
Which of the following government agencies is responsible for the regulation of U.S.
securities markets? - ANS-Securities and Exchange Commission (SEC
Charlotte, a young lawyer, has started investing for her retirement. She is ready to take
some risks to enjoy the opportunity for high capital appreciation. Which of the following
investments would be a likely choice for her? - ANS-Aggressive growth mutual fund
_______ specialize in raising capital for companies and other entities by the issuing and
reselling of new securities. - ANS-Investment banks
Hansom Products' stock is trading for $130 per share, and the company currently has 2
million shares of common stock outstanding. The Board of Directors decides to increase
the number of shares that are outstanding by issuing more shares to current
stockholders, and every shareholder with one share of stock is given an additional
, share, but the price of shares is reduced to $65.00 each. This is an example of ______ -
ANS-a stock split
Which of the following investments gives the investor the right to vote on major issues
concerning the company? - ANS-Common stock
You have established a small investment account that you want to add to periodically
during each month in order to save up for a down payment on a house that you want to
buy within the next ten years. Which of the following would be your BEST choice of
investments? - ANS-Exchange-traded fund (ETF)
If you have $10,000 and invest it at 8% for three years, it will be worth $11,411.66 at the
end of that time. This BEST describes _______ - ANS-the time value of money
The saying "Don't put all your eggs in one basket" BEST describes _______ - ANS-
diversification
Which of the following market indices measures the performance of the smallest
publicly-traded U.S. companies based on market capitalization? - ANS-Russell 2000
Index
The first public offering of a private company's stock is known as a(n) ______ - ANS-
initial public offering (IPO)
On September 19, 2017, Tesla stock closed at $375.10 per share and the market cap
was reported at $62.6 billion. Approximately how many shares were outstanding on that
date? - ANS-166.89 million
Melissa is considering purchasing a corporate bond with a C rating according to
Standard & Poor's because it has an attractive interest rate. This bond would be
classified as a _______ bond - ANS-junk
A stock's _______ value is calculated as owners' equity divided by the number of
shares of common stock it has outstanding. - ANS-book
Which of the following scenarios would BEST describe insider trading? - ANS-Ethan
overhears that the CEO is going to be indicted for securities fraud and quickly sells the
shares of stock he owns in the company before the news of the indictment is released.
The board of commissioners has approved a bond issue in the amount of $340,000 for
the renovation of North Side High School. This is an example of a _______ bond - ANS-
municipal
As the Chief Financial Officer (CFO) of a publicly traded company, you are aware of a
pending lawsuit that will likely cripple the company and send the stock price falling.
However, no one outside of upper management of the company knows about this yet,
Solutions
The first electronic exchange, where investors can buy and sell stock, is the _______. -
ANS-NASDAQ
In order to reduce her investment risk, Madison owns stock in several different
companies, both large and small. She has also invested in some mutual funds and
owns both corporate and municipal bonds. This approach is referred to as _______ -
ANS-diversification
The legal contract between a bond issuer and the purchaser of the bond that specifies
the terms of the bond is referred to as the _______ - ANS-bond indenture
Jada consults a new stockbroker who recommends that a sound investment strategy
would be to subtract her age from 100 and invest that portion of her portfolio in stocks,
and the balance in bonds. This is an example of _______ - ANS-asset allocation
A payment to shareholders from a company's earnings is known as _______ - ANS-a
dividend
A prolonged time period in which stock prices fall and investors appear to lose faith in
the market as a whole is referred to as a(n) _______ market - ANS-bear
The amount of the bond that must be repaid to the bondholder on the maturity date of
the bond is known as its _______ - ANS-face value
Which of the following government agencies is responsible for the regulation of U.S.
securities markets? - ANS-Securities and Exchange Commission (SEC
Charlotte, a young lawyer, has started investing for her retirement. She is ready to take
some risks to enjoy the opportunity for high capital appreciation. Which of the following
investments would be a likely choice for her? - ANS-Aggressive growth mutual fund
_______ specialize in raising capital for companies and other entities by the issuing and
reselling of new securities. - ANS-Investment banks
Hansom Products' stock is trading for $130 per share, and the company currently has 2
million shares of common stock outstanding. The Board of Directors decides to increase
the number of shares that are outstanding by issuing more shares to current
stockholders, and every shareholder with one share of stock is given an additional
, share, but the price of shares is reduced to $65.00 each. This is an example of ______ -
ANS-a stock split
Which of the following investments gives the investor the right to vote on major issues
concerning the company? - ANS-Common stock
You have established a small investment account that you want to add to periodically
during each month in order to save up for a down payment on a house that you want to
buy within the next ten years. Which of the following would be your BEST choice of
investments? - ANS-Exchange-traded fund (ETF)
If you have $10,000 and invest it at 8% for three years, it will be worth $11,411.66 at the
end of that time. This BEST describes _______ - ANS-the time value of money
The saying "Don't put all your eggs in one basket" BEST describes _______ - ANS-
diversification
Which of the following market indices measures the performance of the smallest
publicly-traded U.S. companies based on market capitalization? - ANS-Russell 2000
Index
The first public offering of a private company's stock is known as a(n) ______ - ANS-
initial public offering (IPO)
On September 19, 2017, Tesla stock closed at $375.10 per share and the market cap
was reported at $62.6 billion. Approximately how many shares were outstanding on that
date? - ANS-166.89 million
Melissa is considering purchasing a corporate bond with a C rating according to
Standard & Poor's because it has an attractive interest rate. This bond would be
classified as a _______ bond - ANS-junk
A stock's _______ value is calculated as owners' equity divided by the number of
shares of common stock it has outstanding. - ANS-book
Which of the following scenarios would BEST describe insider trading? - ANS-Ethan
overhears that the CEO is going to be indicted for securities fraud and quickly sells the
shares of stock he owns in the company before the news of the indictment is released.
The board of commissioners has approved a bond issue in the amount of $340,000 for
the renovation of North Side High School. This is an example of a _______ bond - ANS-
municipal
As the Chief Financial Officer (CFO) of a publicly traded company, you are aware of a
pending lawsuit that will likely cripple the company and send the stock price falling.
However, no one outside of upper management of the company knows about this yet,
