SOLVED

31) When Internet coupon site Groupon sold stock to the public for the first time following its IPO in November 2011, it did so through the NASDAQ market. This was an example of Groupon raising funds through A) reinvesting retained earnings. B) a financial intermediary. C) dividend reinvestment. D) a financial market. 32) When Internet coupon site Groupon sold stock to the public for the first time following its IPO in November 2011, it did so through the NASDAQ market. This was an example of Groupon using ________ to raise funds. A) indirect finance B) direct finance C) bonds D) corporate governance 33) When Internet coupon site Groupon sold stock to the public for the first time, funds were being raised in a ________ market, and when those newly issued shares are resold to other buyers, the sales take place in a ________ market. A) primary; primary B) primary; secondary C) secondary; primary D) secondary; secondary 34) Generally with bond ratings, the higher the rating, the ________ the interest rate an investor will receive and the ________ the the risk that the issuer of the bond will default. A) higher; higher B) higher; lower C) lower; higher D) lower; lower 35) In August 2011, Standard & Poor’s (S&P) changed its rating on U.S. Treasury bonds from ________ based on the state of the federal government’s budget deficit. A) “A” to “D” B) “A” to “AAA” C) “A+” to “B+” D) “AAA” to “AA+” 36) If you purchase a share of stock from your friend who initially purchased the stock three years ago, your purchase of the stock represents a transaction in the secondary financial market. 37) Direct finance includes the sale by a corporation of stocks or bonds, but does not include borrowing money from a bank. 38) How can a partnership raise funds needed for firm expansion? 39) What is a corporate bond and what does it specify? 40) How do firms raise external funds through indirect finance? 41) If you own a bond with a seven percent coupon rate and new bonds are paying five percent, what will happen to your bond’s market price? 42) What is the difference between retained earnings and dividends?