金融市场与金融机构基础 Fabozzi Chapter17.docx

1、金融市场与金融机构基础 Fabozzi Chapter17Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)Chapter 17 Markets for Common Stock: The Basic CharacteristicsMultiple Choice Questions1 Common Stock Characteristics1) Equity securities represent _ interest in a corporation. Holders of equ

2、ity securities are entitled to the earnings of the corporation when those earnings are distributed in the form of _. The key distinction between common stock and preferred stock lies in the degree to which they may participate in any distribution of earnings and the priority given to each in the _.A

3、) an ownership; dividends; retainment of earningsB) an ownership; interest; distribution of earningsC) an ownership; dividends; distribution of earningsD) a potential; interest; retainment of earningsAnswer: CComment: Equity securities represent an ownership interest in a corporation. Holders of equ

4、ity securities are entitled to the earnings of the corporation when those earnings are distributed in the form of dividends. They are also entitled to a pro rata share of the remaining equity in case of liquidation. The two types of equity securities are common stock and preferred stock. The key dis

5、tinction between these two forms of equity securities lies in the degree to which they may participate in any distribution of earnings and the priority given to each in the distribution of earnings.Diff: 2Topic: 17.1 Common Stock CharacteristicsObjective: 17.9 the implications of pricing efficiency

6、for a common stock strategy2) For common stock investors, the return realized by holding this investment comes from _.A) dividend paymentsB) decrease in the price of the common stockC) decrease in the price of the common stockD) All of theseAnswer: DComment: For common stock investors, the return re

7、alized by holding this investment comes from two sources: dividend payments and the change in the price of the common stock. The change can be either a decrease or increase.Diff: 2Topic: 17.1 Common Stock CharacteristicsObjective: 17.8 evidence on the pricing efficiency of the stock market3) Which o

8、f the below statements is TRUE?A) Dividends (which are typically in the form of stock) are are distributions made by a corporation to its owners that represent a return on their investment.B) Dividends paid to common stockholders are not legal obligations of a corporation and some corporations do no

9、t pay cash dividends.C) At one time, dividend payments were taxed solely as ordinary income. Ordinary income means that the tax rate applicable is based on the investors average tax bracket.D) Depending on the individuals income tax rate, preferential dividends are taxed at either 5% or 15%.Answer:

10、BComment: Dividends (which are typically in the form of cash) are are distributions made by a corporation to its owners that represent a return on their investment.At one time, dividend payments were taxed solely as ordinary income. Ordinary income means that the tax rate applicable is based on the

11、investors regular marginal tax bracket.Depending on the individuals income tax rate, qualified dividends are taxed at either 5% or 15%.Diff: 2Topic: 17.1 Common Stock CharacteristicsObjective: 17.8 evidence on the pricing efficiency of the stock market4) If the price at a future date _ the purchase

12、price, then there is a _.A) less than; capital gainB) less than; a taxable gainC) exceeds; capital lossD) exceeds; capital gainAnswer: DComment: If the price at a future date exceeds the purchase price, then there is a capital gain; if the price at a future date is less than the purchase price, then

13、 there is a capital loss.Diff: 2Topic: 17.1 Common Stock CharacteristicsObjective: 17.8 evidence on the pricing efficiency of the stock market2 Trading Mechanics1) In regards to types of order, which of the below statements is FALSE?A) The simplest type of order is the market order, an order to be e

14、xecuted at the best price available in the market.B) The danger of a market order is that an adverse move may take place between the time the investor places the order and the time the order is executed.C) A buy limit order indicates that the stock may be purchased only at the designated price or lo

15、wer, while a sell limit order indicates that the stock may be sold at the designated price or higher.D) The key advantage of a limit order is that there is no guarantee that it will be executed at all; the designated price may simply not be obtainable.Answer: DComment: The key disadvantage of a limi

16、t order is that there is no guarantee that it will be executed at all; the designated price may simply not be obtainable.Diff: 2Topic: 17.2 Trading MechanicsObjective: 17.1 trading mechanisms such as the types of orders, short selling, and margin transactions2) The _ is a conditional order and is ex

17、ecuted only if the limit price or a better price can be obtained. Another type of conditional order is the _, which specifies that the order is not to be executed until the market moves to a designated price, at which time it becomes a _.A) limit order; stop order; market orderB) stop order; limit o

18、rder; market orderC) limit order; market order; stop orderD) market order; stop order; limit orderAnswer: AComment: The limit order is a conditional order and is executed only if the limit price or a better price can be obtained. Another type of conditional order is the stop order, which specifies t

19、hat the order is not to be executed until the market moves to a designated price, at which time it becomes a market order.Diff: 2Topic: 17.2 Trading MechanicsObjective: 17.1 trading mechanisms such as the types of orders, short selling, and margin transactions3) In a _ stop order, the designated pri

20、ce is _ than the current market price of the stock, while in a _ limit order, the designated price is _ than the current market price of the stock.A) buy; lower; buy; higherB) sell; lower; buy; lowerC) sell; higher; buy; lowerD) sell; lower; sell; lowerAnswer: BComment: In a sell (buy) stop order, t

21、he designated price is lower (higher) than the current market price of the stock, while in a sell (buy) limit order, the designated price is higher (lower) than the current market price of the stock.Diff: 2Topic: 17.2 Trading MechanicsObjective: 17.1 trading mechanisms such as the types of orders, s

22、hort selling, and margin transactions4) Which of the below statements is TRUE?A) Stock prices often exhibit abrupt price changes, so the direction of a change in a stock price may be quite permanent, resulting in the premature trading of a stock.B) A stop-limit order, a hybrid of a stop order and a

23、limit order, is a stop order that designates a price limit.C) The stop-limit order cannot be used to cushion the market impact of a stop order.D) We can think of the stop order as an order designed to get out of an existing position at an acceptable price (by specifying the exact price), and the mar

24、ket if touched order as an order designed to get into a position at an acceptable price (also by specifying the exact price).Answer: BComment: Stock prices sometimes exhibit abrupt price changes, so the direction of a change in a stock price may be quite temporary, resulting in the premature trading

25、 of a stock.The stop-limit order can be used to cushion the market impact of a stop order.We can think of the stop order as an order designed to get out of an existing position at an acceptable price (without specifying the exact price), and the market if touched order as an order designed to get in

26、to a position at an acceptable price (also without specifying the exact price).Diff: 2Topic: 17.2 Trading MechanicsObjective: 17.1 trading mechanisms such as the types of orders, short selling, and margin transactions5) _ involves the sale of a security not owned by the investor at the time of sale.

27、A) Short buyingB) Long sellingC) Short selling D) Long buyingAnswer: CDiff: 1Topic: 17.2 Trading MechanicsObjective: 17.1 trading mechanisms such as the types of orders, short selling, and margin transactions6) A transaction in which an investor borrows to buy shares using the shares themselves as c

28、ollateral is called _.A) buying on margin.B) selling on margin.C) buying on loan.D) selling on loan.Answer: ADiff: 1Topic: 17.2 Trading MechanicsObjective: 17.1 trading mechanisms such as the types of orders, short selling, and margin transactions7) _ is the minimum proportion of (1) the equity in t

29、he investors margin account to (2) the total market value.A) preservation margin requirementB) maintenance boundary requirementC) maintenance margin conditionD) maintenance margin requirementAnswer: DDiff: 1Topic: 17.2 Trading MechanicsObjective: 17.1 trading mechanisms such as the types of orders,

30、short selling, and margin transactions3 Transaction Costs1) _ are the direct costs of trading, such as broker commissions, fees, and taxes.A) Embedded costsB) Operation costsC) Implicit costsD) Explicit costs Answer: DComment: Transaction costs, also referred to as trading costs, can be decomposed i

31、nto two major components: explicit costs and implicit costs. Explicit costs are the direct costs of trading, such as broker commissions, fees, and taxes. Implicit costs represent such indirect costs as the price impact of the trade and the opportunity costs of failing to execute in a timely manner o

32、r at all. Whereas explicit costs are associated with identifiable accounting charges, no such reporting of implicit costs occurs.Diff: 2Topic: 17.3 Transaction CostsObjective: 17.2 the types of transaction costs encountered when trading stocks2) Investors often choose their _ based on who will give the