Statement 1: Financial securities are instruments that can be transferred or sold easily through established financial markets. Statement 2: Financial securities uses physical certificates that sellers (holders) need to seek the approval and signature of the issuer to be transfered to the buyer. Statement 3: Financial securities are tradesble through established market or over-the counter. Statement 4: Financial securities hold monetary value or face value that is equivalent to their sellin price. Statement 5: Financial securities are fungible that can be converted into assets or cash. a.All statements are true b.Statements 1,2 and3 are true c.Statements 2, 3 and 4 are true d.Statements 3, and 5 are true e.Statements 1,3 and5 are true f. Statements 2, 4 and 5 are true Statement 1: Debtsecurities represent ownership in a firm that would entitle the holders certain dividends and claims in a firm. Statum
Statement 1: Financial securities are instruments that can be transferred or sold easily through established financial markets. Statement 2: Financial securities uses physical certificates that sellers (holders) need to seek the approval and signature of the issuer to be transfered to the buyer. Statement 3: Financial securities are tradesble through established market or over-the counter. Statement 4: Financial securities hold monetary value or face value that is equivalent to their sellin price. Statement 5: Financial securities are fungible that can be converted into assets or cash. a.All statements are true b.Statements 1,2 and3 are true c.Statements 2, 3 and 4 are true d.Statements 3, and 5 are true e.Statements 1,3 and5 are true f. Statements 2, 4 and 5 are true Statement 1: Debtsecurities represent ownership in a firm that would entitle the holders certain dividends and claims in a firm. Statum
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:1. Statement 1: Financial securities are instruments that can be transferred or sold easily through
established financial markets.
Statement 2: Financial securities uses physical certificates that sellers (holders) need to seek the
approval and signature of the is suer to be transferred to the buyer.
Statement 3: Financial securities are tradeable through established market or over-the counter.
Statement 4: Financial securities hold monetary value or face value that is equivalent to their selling
price.
Statement 5: Financial securities are fumgible that can be converted into assets or cash. a.All
statements are true b.Statements 1,2 and3 are true c.Statements 2, 3 and 4 are true d.Statements 3,4
and 5 are true e. Statements 1, 3 and5 are true f. Statements 2, 4 and 5 are true
2. Statement 1: Debt securities represent ownership in a firm that would entitle the holders certain
dividends and claims in a firm.
Statement 2: Equity securities are loans made by the issuing firm that wouldentitle the holders
certain interest andmaturity value.
Statement 3: Debt securities include bonds, certificates of deposits, promissorynotes, govermment
notes and bills.
Statement 4: Equity securities include preferred and common stocks.
Statement 5: Derivative securities include instruments whose underlying assets are bonds, stocks,
commodities, currencies, interest rates and other assets.
a. All statements are true b.Statements 1, 2 and 3 are true c.Statements 2, 3 and 4 are true
d.Statements 3, 4 and 5 are true e.Statements 1, 3 and 5 are true f. Statements 2, 4 and 5 are true 3. Which
is correct about financial securities?
a. Financial securities guarantees retum to investors.
b. Financial securities eliminate risk that most financial managers are facing.
c. Diversification spreads risk and improves expected total retum.
d. Financial securities protect investors againstriskshocks brought by social, economic, andpolitical
events.
e. All of the above
f. None of the above
4. Which is incorrect about financial securities?
a. Financial securities are guarantees the holders in terms of their claims.
b. Financial securities give stable financial retum and safer enviromment to investors. c. Financial
securities are utilized by firms to generate capitalization for firms or the govemment. d. Financial
securities are regulated by the govermment to protect the investing public. e. All of the above
f. None of the above
5. Which is corect about debt securities?
a. Debt securities make the holders owners and give them the right to vote in all matters of the fim.
b. Debt securities give the holders the right to receive interest and dividends.
c. Debt securities give the holders the right to be elected as board of directors or to vote them.
d. Debt securities give the holders the right to convert them into stocks if the indenture states.
e. All of the above
f. None of the above.
6. Which is not considered as a debt security issued byprivate entities?
a. Straight bonds
b. Floating-rate corporate notes
c. Commercial paper
d. Acceptance
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