CFIN CORPORATE FINANCE CH 8 EXAM 100% VERIFIED
A floor broker on the NYSE does which one of the following?
A. supervises the commission brokers for a financial firm
B. trades for his or her personal inventory
C. executes orders on behalf of a commission broker
D. maintains an inventory and takes the role of a specialist
E. is charged with maintaining a liquid, orderly market - ANSWER C
Winston Co. has a stock that pays a dividend; the total return for the year is -6.5 percent.
Which one of the following must be true?
A. The dividend must have been constant.
B. The stock has a negative capital gains yield.
C. The dividend yield must be zero.
D. The required rate of return for this stock increased over the year.
E. The firm is in a state of supernormal growth. - ANSWER B
A company has two open seats, Seat A and Seat B, on its board of directors. There are 6
candidates vying for these 2 positions. There will be one election to determine the
winner of both open seats. As the owner of 100 shares of stock, you will receive one
vote per share for each open seat. You decide to cast all 200 of your votes for a single
candidate. What is this type of voting called?
A. democratic
B. cumulative
C. straight
D. deferred
,E. proxy - ANSWER B
You want to be on the board of directors of Wisely Foods. Since you are the only
shareholder that will vote for you, to be elected to the board you will have to have
ownership of more than half of the outstanding shares of stock. What would you call the
type of voting that requires you to have this level of ownership to successfully be
elected under these conditions?
A. democratic
B. cumulative
C. straight
D. deferred
E. proxy - ANSWER C
You cannot attend the shareholder's meeting for Alpha United so you authorize another
shareholder to vote on your behalf. What is the granting of this authority called?
A. altering
B. cumulative voting
C. straight voting
D. indenture agreement
E. voting by proxy - ANSWER E
What are the distributions to shareholders by a corporation called?
A. retained earnings
B. net income
C. dividends
,D. capital payments
E. diluted profits - ANSWER C
Callander Enterprises stock is listed on NASDAQ. The firm is going to sell some new
equity shares to the general public. This sale will take place in which one of the following
markets?
A. private
B. auction
C. exchange floor
D. secondary
E. primary - ANSWER E
The secondary market is best defined by which one of the following?
A. market in which subordinated shares are issued and resold
B. market conducted solely by brokers
C. market dominated by dealers
D. market where outstanding shares of stock are resold
E. market where warrants are offered and sold - ANSWER D
An agent who maintains an inventory from which he or she buys and sells securities is
called a:
A. broker.
B. trader.
C. capitalist.
, D. principal.
E. dealer. - ANSWER E
An agent who arranges a transaction between a buyer and a seller of equity securities is
called a:
A. broker.
B. floor trader.
C. capitalist.
D. principal.
E. dealer. - ANSWER A
The owner of one of the 1,366 trading licenses for the NYSE is called a:
A. broker.
B. member.
C. agent.
D. specialist.
E. dealer. - ANSWER B
The following individual, working on the floor of the NYSE and executing buy and sell
orders on behalf of customers, is known as a(n):
A. floor trader.
B. dealer.
C. specialist.
D. executor.
E. commission broker. - ANSWER E
A floor broker on the NYSE does which one of the following?
A. supervises the commission brokers for a financial firm
B. trades for his or her personal inventory
C. executes orders on behalf of a commission broker
D. maintains an inventory and takes the role of a specialist
E. is charged with maintaining a liquid, orderly market - ANSWER C
Winston Co. has a stock that pays a dividend; the total return for the year is -6.5 percent.
Which one of the following must be true?
A. The dividend must have been constant.
B. The stock has a negative capital gains yield.
C. The dividend yield must be zero.
D. The required rate of return for this stock increased over the year.
E. The firm is in a state of supernormal growth. - ANSWER B
A company has two open seats, Seat A and Seat B, on its board of directors. There are 6
candidates vying for these 2 positions. There will be one election to determine the
winner of both open seats. As the owner of 100 shares of stock, you will receive one
vote per share for each open seat. You decide to cast all 200 of your votes for a single
candidate. What is this type of voting called?
A. democratic
B. cumulative
C. straight
D. deferred
,E. proxy - ANSWER B
You want to be on the board of directors of Wisely Foods. Since you are the only
shareholder that will vote for you, to be elected to the board you will have to have
ownership of more than half of the outstanding shares of stock. What would you call the
type of voting that requires you to have this level of ownership to successfully be
elected under these conditions?
A. democratic
B. cumulative
C. straight
D. deferred
E. proxy - ANSWER C
You cannot attend the shareholder's meeting for Alpha United so you authorize another
shareholder to vote on your behalf. What is the granting of this authority called?
A. altering
B. cumulative voting
C. straight voting
D. indenture agreement
E. voting by proxy - ANSWER E
What are the distributions to shareholders by a corporation called?
A. retained earnings
B. net income
C. dividends
,D. capital payments
E. diluted profits - ANSWER C
Callander Enterprises stock is listed on NASDAQ. The firm is going to sell some new
equity shares to the general public. This sale will take place in which one of the following
markets?
A. private
B. auction
C. exchange floor
D. secondary
E. primary - ANSWER E
The secondary market is best defined by which one of the following?
A. market in which subordinated shares are issued and resold
B. market conducted solely by brokers
C. market dominated by dealers
D. market where outstanding shares of stock are resold
E. market where warrants are offered and sold - ANSWER D
An agent who maintains an inventory from which he or she buys and sells securities is
called a:
A. broker.
B. trader.
C. capitalist.
, D. principal.
E. dealer. - ANSWER E
An agent who arranges a transaction between a buyer and a seller of equity securities is
called a:
A. broker.
B. floor trader.
C. capitalist.
D. principal.
E. dealer. - ANSWER A
The owner of one of the 1,366 trading licenses for the NYSE is called a:
A. broker.
B. member.
C. agent.
D. specialist.
E. dealer. - ANSWER B
The following individual, working on the floor of the NYSE and executing buy and sell
orders on behalf of customers, is known as a(n):
A. floor trader.
B. dealer.
C. specialist.
D. executor.
E. commission broker. - ANSWER E
