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Question 1
Which of the following is the reason for the evolution of the securities laws?
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Incorrect!
Correct
Incorrect!
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Incorrect!
Correct The modern securities laws evolved in the period following the stock market crash of 1929. The various laws created by Congress carry out a variety of goals. Among these is a need for increased transparency in corporate operations and reporting. Another major need is for a standardized system of accounting so that companies can be better understood from a financial standpoint and more readily compared. Additionally, as was proven by the crash of 1929, the markets themselves require the same sort of oversight and transparency that public firms require.
Incorrect! The modern securities laws evolved in the period following the stock market crash of 1929. The various laws created by Congress carry out a variety of goals. Among these is a need for increased transparency in corporate operations and reporting. Another major need is for a standardized system of accounting so that companies can be better understood from a financial standpoint and more readily compared. Additionally, as was proven by the crash of 1929, the markets themselves require the same sort of oversight and transparency that public firms require.
Question 2
Gus is in the business of creating deals between individuals who own shares in a variety of corporations and people interested in buying those shares. Gus is known as a(n):
Correct
Incorrect!
Correct
Incorrect!
Correct An individual who acts as a 'market maker' ' an intermediary in the sale and purchase of securities ' is known as a broker-dealer. The broker dealer serves a critical role in the exchange of securities by facilitating the types of transactions that allow companies' shares to be freely traded on the open market.
Incorrect! An individual who acts as a 'market maker' ' an intermediary in the sale and purchase of securities ' is known as a broker-dealer. The broker dealer serves a critical role in the exchange of securities by facilitating the types of transactions that allow companies' shares to be freely traded on the open market.
Correct
Incorrect!
Question 3
A corporate debt instrument which is publicly traded is referred to as a(n):
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Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct A bond is the common name for a corporate debt that is traded by the public.
Incorrect! A bond is the common name for a corporate debt that is traded by the public.
Question 4
If a bond is said to have a "coupon of 3%" and a face value of $100, has a three year maturity, was originally sold for $70, and can be purchased in the market for $96 currently, what amount will be paid the holder of the bond at maturity?
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct The question above contains a great deal of information that is intended to trick you into going for a head fake. Each item of information is important to determine some element of the bond. The bond's 'coupon rate' tells you how much interest the bond is supposed to pay every year. The bond's original price gives you a baseline to calculate any implied interest in the instrument. The bond's current market price tells you what the bond would cost to buy or sell in the current market, and the bond's time to maturity tells you how long it will be before the company pays back and retires the bond. However, the ultimate goal of the question was simply to make you recognize that the face value of the bond represents that cash redemption value of the bond at maturity, regardless of what other terms are structured into the bond itself.
Incorrect! The question above contains a great deal of information that is intended to trick you into going for a head fake. Each item of information is important to determine some element of the bond. The bond's 'coupon rate' tells you how much interest the bond is supposed to pay every year. The bond's original price gives you a baseline to calculate any implied interest in the instrument. The bond's current market price tells you what the bond would cost to buy or sell in the current market, and the bond's time to maturity tells you how long it will be before the company pays back and retires the bond. However, the ultimate goal of the question was simply to make you recognize that the face value of the bond represents that cash redemption value of the bond at maturity, regardless of what other terms are structured into the bond itself.