1. A new issue of corporate securities sold to the general public must be
registered with the SEC
initially sold through brokers
offered initially to existing stockholders
bought by specialists in corporate securities
2. Risk
Depends solely on price fluctuations
Should be maximized to increase returns
Is reduced through specialization
refers to the uncertainty of returns
3. Exchange rate risk refers to fluctuations in the prices of foreign moneys (i.e., foreign exchange).
True
False
4. Inflation, which is general decline in prices, is the source of financial risk?
True
False
5. Reinvestment rate risk refers to fluctuations in
a stock's price
a stock's dividend
rates earned when funds are reinvested
the cost of an investment
6. On the floor of a futures exchange one futures contract is traded where both the long and short parties are closing out existing positions. What is the resultant change in the open interest?
No change
Decrease by one
Decrease by two
Increase by one
7. Diversification reduces
Systematic risk
Unsystematic risk
market risk
purchasing power risk
8. Unsystematic risk refers to factors that are unique to the specific asset.
True
False