Name __Lauren Sutherland___Chapter 191. What is the primary purpose of a securities exchange?The primary purpose of the securities exchange is to allow members to buy or sell securities on behalf of investors.2. Name at least two advantages and two disadvantages of a company’s issuing stock as a form of equity financing.Two advantages are there are no legal obligation to pay dividends and stockholders are owners of a firm and never have to be repaid their investment. While two disadvantages are stockholders have the right to vote for a company’s board of directors and dividends are paid from after tax profits and are not tax deductible.3. What are the major differences between common stock and preferred stock?Common stock, holder have the right to vote for the board of directors and share the profits of dividends are approved. While preferred stock owners are given preference in the payment of company dividend before common stock dividends are distributed.4. Why are convertible bonds attractive to investors?Convertible bonds are attractive to investors because they give bondholders the option to convert bond into stocks. 5. What is the key advantage of investing through online brokers? What is the key disadvantage?The key advantage of investing through online brokers is the fees charged ten to be lower than traditional brokers. While the they disadvantage is that investors must do their own research and make their own investment decision without direct assistance from their broker.6. What is the primary purpose of diversifying investments?The primary purpose of diversifying investment is to reduce the overall risk an investor assumes.7. What does buying stock on margin mean?What it means to buy stock or margin is they use money borrowed from their broker to purchase stock.8. What are mutual funds and ETFs?Mutual funds are an organization that buys stocks and bond and then sell shares in those securities to the public.9. What is the key benefit to investors in investing in a mutual fund or ETF?The key benefit to investors in investing in a mutual fund is to get instant diversification. 10. What does the Dow Jones Industrial Average measure? Why is it important?The Dow Jones Industrial Average measures the average coast of 30 selected industrial stocks which gives an indication of the direction of the stock market over
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