FIN 534 Midterm Exam Part 1(Latest)
1. Which of the following statements is CORRECT?
The New York Stock Exchange is an auction market with a physical location.
Capital market transactions involve only the purchase and sale of equity securities, i.e., common
stocks.
If an investor sells shares of stock through a broker, then this would be a primary market
transaction.
Consumer automobile loans are evidenced by legal documents called "promissory notes," and
these individual notes are traded in the money market.
While the distinctions are blurring as investment banks are today buying commercial banks, and
vice versa, investment banks generally specialize in lending money, whereas commercial banks
generally help companies raise capital from other parties.
2. Which of the following statements is CORRECT?
It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole
proprietorship.
Corporate shareholders are exposed to unlimited liability.
Corporations generally face fewer regulations than sole proprietorships.
Corporate shareholders are exposed to unlimited liability, and this factor may be compounded by
the tax disadvantages of incorporation.
Shareholders in a regular corporation (not an S corporation) pay higher taxes than owners of an
otherwise identical proprietorship.
1. Which of the following statements is CORRECT?
The New York Stock Exchange is an auction market with a physical location.
Capital market transactions involve only the purchase and sale of equity securities, i.e., common
stocks.
If an investor sells shares of stock through a broker, then this would be a primary market
transaction.
Consumer automobile loans are evidenced by legal documents called "promissory notes," and
these individual notes are traded in the money market.
While the distinctions are blurring as investment banks are today buying commercial banks, and
vice versa, investment banks generally specialize in lending money, whereas commercial banks
generally help companies raise capital from other parties.
2. Which of the following statements is CORRECT?
It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole
proprietorship.
Corporate shareholders are exposed to unlimited liability.
Corporations generally face fewer regulations than sole proprietorships.
Corporate shareholders are exposed to unlimited liability, and this factor may be compounded by
the tax disadvantages of incorporation.
Shareholders in a regular corporation (not an S corporation) pay higher taxes than owners of an
otherwise identical proprietorship.
