FIN $403$

Chooese the correct answer $..$

$1.$The basis of stock valuation includes an analysis of:

A$.$Economic variables

B$.$Industry variables

C$.$Financial statements

D$.$All of the following.

$2.\_\_\_\_\_\_\_\_\_\_\_$ has two major functions: to handle special orders, such as purchases with a price contingency; and to maintain continuous, liquid, orderly markets:

A$.$ A registered trader.

B$.$A specialist

C$.$An odd$-$lot dealer.

D$.$Commission broker.

$3.$Political risk can best be effectively reduced or eliminated:

A$.$By investing only in European countries.

B$.$Through sufficient international diversification.

C$.$By investing only in countries friendly to the United States.

D$.$None

$4.$Which of the following is not a form of a financial asset?

A$.$Commercial paper

B$.$Commodity futures

C$.$Warrants

D$.$Personal residence

$5.\_\_\_\_\_$ would probably be used to compare the financial ratios of a company with those of the industry.

A$.$Key Business Ratios

B$.$Robert Morris Associate$$s$.$

C$.$Dow Jones$-$Irwin Business Almanac.

D$.$Mergent $($Moody$\text{'}$s$)$ Industrial Manual.

$6.$ Why do industries usually enter the decline stage?

A$.$Product innovation has not increased the product base over the years.

B$.$Low dividend payout ratios have kept spending in research and development down.

C$.$Economic recessions have lowered sales.

D$.$Competition from foreign producers has limited profits.

$7.$ A direct equity claim arises through investment in :

A$.$Bonds and other debt instruments.

B$.$Common stocks, warrants and options.

C$.$Preferred stock and commodity futures.

D$.$Mutual funds.

$8.$The exchange with the largest dollar volume in major companies and which has the most restrictive listing requirements is :

A$.$The New York Stock Exchange

B$.$The American Exchange

C$.$The NASDAQ Stock Market

D$.$The Securities Exchange

$9.$ Electronic communication systems.

A$.$Allow investors to communicate with others in investor chat rooms.

B$.$Allow markets to trade American Depository Receipts on$-$line in Europe and Asia.

C$.$Automatically match buy and sell orders at specified prices.

D$.$Are operated by the investment bankers to stabilize new issue markets.

$10.$ The crossover point on the life cycle curve is the point where:

A$.$The company issues stock in an initial public offering $($IPO$).$

B$.$The company gets listed on an organized exchange.

C$.$The company's industry moves from the growth stage to the expansion stage.

D$.$The industry's products begin to be accepted by the marketplace.

Answer the Q:

$1.$ List the five stages of the industry life cycle. How does the pattern of cash dividend payments change over the cycle?

$2.$ What is an efficient market? Explain the difference between primary and secondary markets.