Finance Chapter 12

Corporate ownership of an investor is evidenced by: common stocks held in a corporate.
When evaluating a stock as a possible investment, one must consider:
Bonds are issued: by corporations and state, local, and federal governments.
Stocks whose earnings have increased at an above average level over time are called: growth stocks
To most stockholders, the main advantages of common stock investments are: attractive returns and active trading
A bond selling below par value is selling at: discount
If you are looking for a guaranteed steady stream of income, you should invest in __________. bonds
When the market interest rate decreases, the bond: Decreases
The business risk faced by an investor when investing in a company is related to: the firm’s ability to meet operating expenses in a timely manner.
Changes in the general level of prices within an economy produce: purchasing power risk.
What is the effect of an increase in the current price of an investment?
The _____ of a stock reflects stockholders’ confidence. price/earnings ratio
__________ dividends are the most common form of dividends. cash
Cash dividends on common stock are most often paid: quarterly
Positive aspects about bonds include: low risk as compared to equity.
__________ is a measure of stock investors’ confidence in a corporation. price/earnings ratio
__________ risk results from the behavior of investors in the securities markets that may cause security prices to fluctuate. market
One of the advantages of common stock investments is:
If an investor wants a higher level of return on an investment, he or she should expect __________. a higher risk exposure
An investor receives return from an investment due to: capital gains on sale of an investment
Which of the following investments have the highest liquidity risk? corporate bonds
When interest rates rise, bond prices will: fall
Stock profitability is often measured by return on equity
Which of the following statements about risk is correct? The higher the risk, the higher the expected return
An investor receives return from an investment due to:

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