Financial Management - Study Mode
[#371] Companies take savings as premium, invest in bonds and make payments to beneficiaries are classified as
Correct Answer
(B) life insurance companies
Explanation
Solution: Companies take savings as premium, invest in bonds and make payments to beneficiaries are classified as life insurance companies.
[#372] Mutual fund allows investors to sale out their share during any normal trading hours is classified as
Correct Answer
(A) exchange traded fund
Explanation
Solution: Mutual fund allows investors to sale out their share during any normal trading hours is classified as exchange traded fund. Exchange Traded Funds (ETFs) are mutual funds listed and traded on stock exchanges like shares. Index ETFs are created by institutional investors swapping shares in an index basket, for units in the fund.
[#373] Step in initial public offering in which hired agents act on behalf of owners is classified as
Correct Answer
(B) agency problems
Explanation
Solution: Step in initial public offering in which hired agents act on behalf of owners is classified as agency problems. The agency problem is a conflict of interest inherent in any relationship where one party is expected to act in another's best interests. In corporate finance, the agency problem usually refers to a conflict of interest between a company's management and the company's stockholders.
[#374] Financial security which is tax exempted and issues by state governments to individuals is classified as
Correct Answer
(C) municipal bonds
Explanation
Solution: Financial security which is tax exempted and issues by state governments to individuals is classified as municipal bonds. Municipal bonds are loans investors make to local governments. They are issued by cities, states, counties, or other local governments. For that reason, the interest they pay on the bonds is tax-free.
[#375] A company sells its stock shares for raising more equity capital is classified as
Correct Answer
(B) seasoned equity offering
Explanation
Solution: A company sells its stock shares for raising more equity capital is classified as seasoned equity offering. A seasoned issue is an issue of additional securities from an established company whose securities already trade in the secondary market. A seasoned issue is also known as a "seasoned equity offering" or "follow-on offering." New shares issued by blue-chip companies are considered seasoned issues.