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Unformatted text preview: Practice Questions for Exam #1. My exams are about 40% True/False and about 60% multiple choice. Below are essentially all of the questions that I have asked since 2000. They give a pretty good idea of what I ask questions about. The format of the questions change over time so don’t try to memorize the questions. Instead, use them to provide a roadmap of the type of information you need to have in your head for the exam. I have not tried to order these questions in any particular way. Instead, I simply cut and pasted from the actual exams. True False 1) IBM receives no money when a secondary trade of IBM stock occurs. True ____ X ___ False _______ 2) The bid price is the price at which you are able to sell a security to a dealer. True ____ X ___ False _______ 3) The American Stock Exchange is an example of an over-the-counter market. True ________ False ___ X ____ 4) Common Stock shareholders in a corporation have unlimited liability. True ________ False ___ X ____ 5) ''The separation of ownership and control'' is a key characteristic of general partnerships which enables them to raise funds from a diverse group of anonymous investors. True ________ False ___ X ____ 6) A disadvantage of corporations is the "double taxation" of income at both the corporate and shareholder level. True ____ X ____ False _______ 7) The “Money Market” generically refers to trading of debt securities with maturities of less than one year. True ____X____ False ________ 8) Bid prices are always lower than ask prices. True ____X____ False ________ 9) You can invest in two savings accounts. Account 1 pays an APR of 11% compounded weekly (52 weeks in the year) while account 2 pays an APR of 11.1% compounded monthly. Account 2 is better than account 1. True ____X____ False ________ 10) Preferred stock is senior to common stock. True ____X____ False ________ 11) The NASDAQ is an example of an over-the-counter market. True ____X____ False ________ 12) When one investor sells a share of stock to another investor, that trade is referred to as a secondary trade. True ___X___ False _______ 13) The profits of a General Partnership are taxed twice, once at the level of the firm, and a second time when the remaining profits are distributed to the partners. True ________ False ___X___ 14) The American Stock Exchange is an example of an over-the-counter market. True ________ False ___X___ 15) In a corporation’s capital structure, debt is senior to preferred stock which is senior to common stock. True ____X__ False _______ 16) High Tech companies, particularly those that are young and small, are more likely to have their stock traded on the NASDAQ stock exchange than on the NYSE or AMEX stock exchanges....
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- Fall '10