Which of the Following Statements About Financial Markets and Securities

question 18

Multiple Choice

Which of the following statements about financial markets and securities is TRUE?

• A)Many common stocks are traded over-the-counter,although the largest corporations usually have their shares traded at organized stock exchanges such as the New York Stock Exchange.
• B)As a corporation gets a share of the broker's commission,a corporation acquires new funds whenever its securities are sold.
• C)Capital market securities are usually more widely traded than shorter-term securities and so tend to be more liquid.
• D)Prices of capital market securities are usually more stable than prices of money market securities,and so are often used to hold temporary surplus funds of corporations.

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Definitions:

Date of Record

The specified date when a company determines the owners of its stock to be eligible for a forthcoming dividend or corporate action.

Stock Split

A corporate action that increases the number of shares in a company by issuing more shares to current shareholders, thereby reducing the price per share, without changing the shareholders' equity.

Common Stock Account

An equity account that represents ownership in a corporation and entitles holders to voting rights and dividends.

Retained Earnings Account

An equity account on a company’s balance sheet that represents the accumulated portion of earnings not distributed to shareholders as dividends.