ch04 - Chapter 4 SECURITIES MARKETS Multiple Choice...

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Chapter 4 SECURITIES MARKETS Multiple Choice Questions The Primary Markets 1. The sale of a new issue of common stock of which there are already shares publicly held is known as: a. an IPO. b. a secondary market issue. c. an EPO. d. a seasoned new issue. (d, easy) 2. In an underwriting arrangement, the risk is assumed by the: a. issuer of the security b. investment bankers c. commercial bankers d. institutional investors (b, easy) 3. The ___________ summarizes information about a new security issue. a. syndicate offer b. IPO c. prospectus d. shelf rule (c, easy) Chapter Four Securities Market 38
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4. Investment bankers are compensated by: a. the underwriting spread b. commissions paid by the buyers of the security c. commission paid by the sellers of the security d. guaranteed investment contracts (a, moderate) 5. A major appeal for U.S. firms selling bonds in the Euro market is: a. less regulation than in the U.S. b. lower bond yields than in the U.S. c. less competition than in the U.S. d. less price volatility than in the U.S. (b, difficult) 6. A major advantage of private placements over public offerings is: a. greater marketability b. lower interest cost c. elimination of SEC registration d. all of the above (c, moderate) 7. The shelf rule a. became effective in 1933 b. involves securities that are placed directly with financial institutions c. permits qualified companies to file a short form registration d. involves dealer procedures in the OTC market (c, moderate) 8. Investment bankers operate in the: a. primary market b. secondary market c. third market d. fourth market (a, easy) Chapter Four Securities Market 39
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The Secondary Markets 9. NASDAQ stocks: a. are generally foreign stocks. b. trade via the Blue Sheets. c. are not generally listed on organized exchanges. d. represent less than 1,000 companies. (c, easy) 10. Which exchange member is assigned to a specific trading post? a. Commission broker b. Floor trader c. Specialist d. Dealer (c, easy) 11. Most of the members on the NYSE are associated with: a. investment banks b. commercial banks c. the SEC d. stockbrokerage firms (d, easy) 12. The NYSE is now a: a. not-for-profit corporation. b. a quasi-federal agency. c. a publicly-owned company. d. a multinational company. (c, moderate) Chapter Four Securities Market 40
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13. A block trade is defined as a transaction involving at least: a. 1,000 shares b. 5,000 shares c. 10,000 shares d. 1 million share (c, moderate) 14. A type of trading involving a basket of 15 stocks or more and often used in conjunction with arbitrage strategies is called: a. swapping b. program trading c. day trading d. insider trading (b, moderate) 15. Which of the following is not true regarding the Amex?
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This note was uploaded on 08/29/2009 for the course BUS Invt taught by Professor Yost during the Spring '09 term at W. Florida.

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ch04 - Chapter 4 SECURITIES MARKETS Multiple Choice...

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