CFIN4 CHAPTER 3 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES ALREADY GRADED A+
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CFIN4 CHAPTER 3
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CFIN4 CHAPTER 3
CFIN4 CHAPTER 3 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES ALREADY GRADED A+
When a corporation wants to raise funds by issuing new stocks or bonds, it generally uses the services of
a. an investment banker.
b. a commercial lender.
c. the Securities and Exchange Comm...
CFIN4 CHAPTER 3 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALES
ALREADY GRADED A+
When a corporation wants to raise funds by issuing new stocks or bonds, it generally
uses the services of
a. an investment banker.
b. a commercial lender.
c. the Securities and Exchange Commission (SEC). d. the New York Stock Exchange
(NYSE).
e. None of the above. - Answer-a. an investment banker
If a corporation that has been in business for many years (for example IBM) wants to
raise funds by issuing new common stock, its stock will be sold in the ___________
market.
a. primary
b. secondary
c. debt
d. money
e. In this case, the stock can be sold in more than one of the above markets. - Answer-
a. primary
Treasury bills, which represent debt of the U.S. government, have maturities less than
one year. As a result, in which type of financial market do outstanding, or already
issued, Treasury bills trade?
a. capital market
b. primary market
c. money market
d. stock markets
e. Treasury bills trade in more than one of the above markets - Answer-c. money market
Capital markets are markets for
a. commercial paper.
b. short-term debt securities.
c. long-term debt securities.
d. Treasury notes.
e. none of the above. - Answer-c. long-term debt securities
The facilities needed to conduct over-the-counter market transactions include all of the
following except:
, a. physical stock exchange to sell and buy stocks
b. securities dealers who make the market
c. brokers acting as agent to bring investors and dealers together
d. electronic networks that provide communication links between brokers and dealers.
e. all of the above are needed for over-the-counter market transactions - Answer-b.
securities dealers who make the market
Which of the following is considered an organized stock exchange?
a. New York Stock Exchange (NYSE)
b. National Association of Security Dealers Automated Quotation System (NASDAQ)
c. Over-the-Counter (OTC) market
d. All of the above are organized exchanges.
e. None of the above is an organized exchange - Answer-a. New York Stock Exchange
(NYSE)
Which of the following is not a considered financial intermediary?
a. commercial bank
b. savings and loan association
c. pension fund
d. investment bank
e. All of the above are financial intermediaries - Answer-d. investment bank
Which of the following transactions takes place in secondary markets?
a. New stock sold in an initial public offering.
b. Treasury securities auctioned off by the government.
c. Stock sold by an insurance company to adjust its portfolio of assets'.
d. Stock sold in a seasoned equity offering.
e. None of the above. - Answer-c. Stock sold by an insurance company to adjust its
portfolio of assets'.
Which of the following factors distinguish the banking system in the United States from
banking structures in other countries?
a. Financial institutions in the United States are less regulated than their foreign
counterparts.
b. Financial institutions in the United States have fewer limitations with regard to
branching activity than their foreign counterparts.
c. Financial institutions in the United States have greater limitations with regard to non-
banking business relationships than their foreign counterparts.
d. Financial institutions in the United States have been able to grow much larger in size
than their foreign counterparts.
e. Financial institutions in the United States dominate international banking activities. -
Answer-c. Financial institutions in the United States have greater limitations with regard
to non-banking business relationships than their foreign counterparts
Which of the following is not an advantage of going public?
a. It allows a firm's founders to diversify their holdings.
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