1. As founder and CEO of a growing public company, you are considering issuing shares of stock to finance an expansion. All of the following statements about stock are true EXCEPT:
a. money obtained from the sale of stock does not have to be paid back
b. if you issue stock instead of using debt to finance your expansion, there is no interest
c. if you issue stock to the public, you company will automatically increase its profits
d. if the company does well, you could distribute some of its earnings by paying dividends
2. Rationalization of a white collar crime by the perpetuator includes which of these:
a. They owe me
b. Borrowing
c. Nobody will get hurt
d. I deserve more
e. All of the above
3. All of the following are ways to transfer funds from net savers to net users EXCEPT:
a. through a financial intermediary like a bank
b. through a direct placement
c. through the federal government
d. through an investment banker
4. White collar crime is a victimless crime.
a. True b. False
5. Financial capital represents funds a firm uses to acquire assets and finance its operations. All of the following represent forms of financial capital except:
a. newly issued common stock
b. new Bond issues
c. long term loans
d. reinvested earnings (Retained Earnings)
e. intellectual property
6. ________ is where new securities are offered to any investors who are willing and able to purchase them. And, the issuing company had the securities sale authorized by ________
a. The Secondary market; the IRS
b. The NASDAQ system; the federal ethics committee
c. The Primary market; the SEC
d. The Chicago Board of Trade; the New York Stock Exchange