PSU Finance 301 Exam 2 Questions All Solved.

For an investment company, the primary source of funds is____________________ and the primary use of funds for an investment company is__________________. - Answer Shares; Securities For an insurance company, the primary source of funds is___________ and the primary use of funds for an insurance company is __________________. - Answer Reserves; Bonds For a commercial bank, the primary source of funds is______________ and the primary use of funds a commercial bank is________________. - Answer Deposits; Loans What is the primary way that mutual funds fund their assets? - Answer by selling shares Which group receives the largest payoff from an acquisition? - Answer target shareholders What best describes the term tombstone? - Answer An advertisement placed about an upcoming IPO What is true of spinoffs? - Answer spinoffs are usually a free transaction to shareholders What is true of equity carve outs? - Answer they issue and IPO to raise additional capital What is not a role of financial markets? - Answer to transfer money between investors What type of security is a savings account? - Answer a secondary security dividend yield - Answer dividend/stock price dividend payout ratio - Answer dividend/eps What is an order to buy a certain security at a specific price called? - Answer a limit buy order The IRR of a project represents what? - Answer The discount rate that makes the NPV equal to zero