Question : 51) What happens in the primary market? A) Primary inputs like : 1387620

51) What happens in the primary market?

A) Primary inputs like electricity are sold.

B) A corporate financial manager will resell previously issued shares of stock.

C) Newly issued claims are sold by the borrowing firm to the initial buyer.

D) Already issued claims are sold from one investor to another.

52) The three most widely followed stock indexes in the United States include all of the following except

A) the Dow Jones Industrial Average.

B) the S&P 500.

C) the Fortune 500.

D) the NASDAQ.

53) When you buy previously-issued shares of Facebook stock, this transaction takes place in the

A) primary market.

B) bond market.

C) secondary market.

D) bear market.

54) Securities dealers that trade stocks and bonds outside exchanges comprise the

A) foreign exchange market.

B) over-the-counter market.

C) NASDAQ market.

D) outlet market.

55) When the coupon rate on newly issued bonds increases relative to older, outstanding bonds, what happens?

A) The market price of the older bond falls in the secondary market.

B) The market price of the older bond rises in the secondary market.

C) Older bonds can still be sold at their face value.

D) Older bonds will sell for less than their face value.

56) You have a bond that pays $60 per year in coupon payments. Which of the following would result in a decrease in the price of your bond?

A) Coupon payments on newly-issued bonds fall to $40 per year.

B) The likelihood that the firm issuing your bond will default on debt decreases.

C) The price of a share of stock in the company rises.

D) Coupon payments on newly-issued bonds rise to $75 per year.

57) A stock’s dividend yield is determined by

A) dividing the dividend payment by the stock’s initial price.

B) dividing the dividend payment by the stock’s closing market price.

C) dividing the stock’s closing market price by the dividend payment.

D) subtracting the stock’s initial purchase price from the stocks’ closing market price on a given day.

58) The volatility of a stock’s market price is indicated by

A) the highest stock price and the lowest stock price over the previous year.

B) the price of newly issued shares compared to the price of previously issued shares.

C) the difference between the stock’s selling price and its asking price.

D) the stock’s price-earnings ratio.

59) How is a stock’s price-earnings ratio found?

A) by dividing the dividend by the closing price of the stock

B) by dividing the dividend by the firm’s earnings per share

C) by dividing current market price of the stock by the firm’s earnings per share

D) by subtracting the firm’s earnings per share from the closing price of the stock

60) In October 2013, Abercrombie & Fitch (ANF) posted a price-earnings ratio of 13. If the price of the stock at that time was $36 per share, which of the following must have been true?

A) ANF’s revenues that month were $4.68 million.

B) ANF’s earnings per share was $2.77.

C) ANF’s coupon payment was $23.23 per year.

D) ANF’s dividend yield for the year was 47%.