Question 11 How did mortgage-backed securities contribute to the subprime mortga

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Question 11 How did mortgage-backed securities contribute to the subprime mortgage crisis that has been experienced recently? Question 12 What are the differences between common stock and preferred stock? In which situations do corporations use each kind of stock to raise funds? Question 1 A domestic bond is a bond: Question 2 _ include asset-backed bonds and mortgage bonds. Question 3 If a lessee has the light to purchase the based assets at the end of the lease for the value of those assets at the end of the lease, the lease is a__ lease. Question 4 A_ is the legal document that the SEC requires that corporations file to disclose financial information about the company before the corporation can sell stock to the public. Question 5 A firm that raises money so that it can invest in new firms by buying most of the equity in that new firm from the firm rather than through a stock exchange is called a: If a firm offering its stock to the public for the first time does not establish a selling price for the stock but instead allows the market to set the price, the issue is considered to be: Question 8 When an underwriter buys all of the stock offered by a corporation in its initial public offering and then resells that stock, the transaction is called: Question 9 The difference between the offer price of a share of stock and the price at which the underwriter buys a share of stock, which represents the underwriter's fee, is called: Question 10 If a firm owns an asset, It might be able to deduct depreciation expenses. Taking it a step further, if a firm leases an asset under an operating lease, what expenses, if any, can it deduct? Question 6 In the context of bonds, an indenture is:

Explanation / Answer

(11)

Subprime mortgage is a lending activity of whose credit history is poor or not sufficient to get a conventional mortgage. These mortgages offer interest-only loans. These are one of the causes of U.S. 2009 recession, because the homeowners whoever taken subprime mortgages will suffer the losses when the housing market declines and mostly they were default to pay the principle amounts. Therefore, this subprime mortgage crisis was caused to U.S. economy into the worst situation or recession.

(12) Difference between Common stock and preferred stockholder’s:

Preferred stockholder’s having priority at the time of dividend payment and the dividend payment is also fixed for them, but in the case of common stock holder’s, they should be payable the dividend after the preferred holders. Therefore, preferred stockholders must be paid before common stockholders and always receive their dividends first. Even at the time of insolvency (or) the company is going to bankruptcy, preferred stockholder’s should be given first priority for the company’s asset and the common stockholder’s are in last line. Usually common stockholders having a voting right but in the case of preferred there is no voting right to them. Company’s which are having good financial health can issue common stock.

(1) A Domestic bond is a bond issued by a domestic entity, traded on a domestic exchange, and denominated in the domestic currency.

Hence, the correct option is (d)

(2) Secured debts include Asset-backed bonds and mortgage bonds

(3) If a lessee has the right to purchase the leased assets at the end of the lease for the value of those assets at the end of the lease, the lease is a Fair market lease           

(4) A Registration statement is the legal document that the SEC requires that corporation file to disclose financial information about the company before the corporation can sell stock to the public.

(5) A firm that raises money so that it can invest in new firms buying most of the equity in that new firm from the firm rather than through a stock exchange is called:

Venture Capital firm

(7) Underwritten

(8) A firm commitment IPO

(9) Underwriting spread

(10) A firm that leases an asset can deduct the lease payments as ordinary and necessary business expenses

(6) In the context of bonds, an indenture is:

Indenture is a legal contract or a binding agreement between the issuer of the bond and the buyer of the bond (bond holder).

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