1.00 point Which of the following is not a money market instrument? Treasury bills Commercial paper Negotiable certificates of deposit Treasury bonds Learning Objective: 14-01 The Multiple Choice capital markets; both domestic and Difficulty: Basic foreign; are made up of securities that have a life of one year or longer (often much longer). 1.00 point During the next several years, the major threat to the dominance of the U.S. money and capital markets is expected to come from Russia’s difficulty in transforming its economy into a capitalistic one. Japan’s prolonged recession and banking crisis. the Eurozone countries comprising the European Monetary Union and a single currency. the huge Chinese economy and its billion-plus people. Learning Objective: 14-02 The primary participants raising funds in Multiple Choice Difficulty: Intermediate domestic capital markets are the U.S. Treasury; other agencies of the federal; state; and local governments; and corporations. award: 1.00 point Federally sponsored credit agencies include all but which of the following? Securities Investor Protection Corporation (SIPC) Federal Home Loan Banks (FHLB) Student Loan Marketing Association (Sallie Mae) Federal National Mortgage Association (Fannie Mae) Learning Objective: 14-02 The primary participants raising funds in Multiple Choice Difficulty: Intermediate domestic capital markets are the U.S. Treasury; other agencies of the federal; state; and local governments; and corporations. award: 1.00 point Which of the following is an internal source of funds? Cash flow from depreciation (tax shield) Net loss Repurchase of debt securities Bank loan Learning Objective: 14-01 The Multiple Choice capital markets; both domestic and Difficulty: Basic foreign; are made up of securities that have a life of one year or longer (often much longer). award: 1.00 point Which of the following is not an example of indirect investment by a household? Investment in a mutual fund’s shares Investment in an original offering of corporate securities Learning Objective: 14-03 The United States is a three-sector Multiple Choice Difficulty: Basic economy in which households; Investment in life insurance A savings deposit in a commercial bank corporations; and governmental units allocate funds among themselves. award: 1.00 point Security markets provide liquidity by allowing corporations to raise funds by selling new issues. by creating a market in which owners may easily turn an investment into cash through its sale. by allowing corporations to raise funds by selling new issues and by creating a market in which owners may easily turn an investment into cash through its sale. None of these options are correct. Multiple Choice Difficulty: Basic Learning Objective: 14-04 Securities markets consist of physical and electronic markets. award: 1.00 point Of the following efficient market hypotheses, which one has research generally indicated is not correct? Weak Semi-strong Strong Two of the options Learning Objective: 14-05 Security Multiple Choice Difficulty: Basic markets are considered to be efficient when prices adjust rapidly to new information. award: 1.00 point American Health Systems currently has 5,600,000 shares of stock outstanding and will report earnings of $17 million in the current year. The company is considering the issuance of 1,300,000 additional shares that will net $40 per share to the corporation. a. What is the immediate dilution potential for this new stock issue? (Do not round intermediate calculations and round your answer to 2 decimal places.) Dilution $ per share b-1. Assume that American Health Systems can earn 6 percent on the proceeds of the stock issue in time to include them in the current years results. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Earnings per share $ b-2. Should the new issue be undertaken based on earnings per share? No Yes View Hint #1 Lea…
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