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Unformatted text preview: Section Three Test Bank Chapter 9 Securities Markets TRUE-FALSE QUESTIONS F 1. The primary market is a market in which securities are traded among investors. T 2. The issuer has no price risk in a firm commitment offering once the offer price is set. T 3. All public offerings are regulated by the Securities and Exchange Commission (SEC). T 4. Under a best-effort agreement, investment bankers try to sell the securities of the issuing corporation, but they assume no risk for a possible failure of the flotation. F 5. Shelf registration allows firms to register only debt issues with the SEC, and have them available to sell for two years. F 6. All firms can use shelf registration which saves issuers both time and money. F 7. Private placement can avoid SEC registration and all SEC regulations. T 8. Rights offerings among public corporations became infrequent in the United States during the 1980s and 1990s. F 9. The flotation costs of an initial public offering are comprised solely of direct costs and the spread. F 10. IPO under pricing occurs only in the United States. T 11. Firm commitment flotation costs are typically lower than those of best efforts. F 12. An important function of the Securities and Exchange Commission is to pass judgment on the investment merit of a security. F 13. A dealer is a person who assists in the trading process by buying or selling securities in the market for an investor. 230 Section Three Test Bank T 14. The Glass-Steagall Act of 1933 ended the ability of commercial banks to act as underwriters of newly issued securities. T 15. The secondary markets provide pricing information and liquidity to investors. F 16. Floor brokers act as agents to execute customers orders for securities purchases and sales. T 17. Spets are assigned dealers who have the responsibility of making a market in an assigned security. F 18. All securities must be listed before they may be traded on the American Stock Exchange and regional exchanges. F 19. A limit order is an order to sell stock at the market price when the price of the stock falls to a specified level. T 20. The maintenance margin is the minimum margin to which an investment may fall before a margin call is placed. T 21. Program trading is a technique for trading stocks as a group rather than individually, defined as a minimum of at least 15 different stocks with a minimum value of $1 million. F 22. The fourth market is a market for large blocks of listed stocks that operate outside the confines of the organized exchanges. T 23. American depository receipts are receipts which represent foreign shares to U.S. investors. T 24. Insider trading regulation is provided for under the Securities Exchange Act of 1934....
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This note was uploaded on 11/01/2011 for the course ACC 200 taught by Professor Minliu during the Spring '11 term at Universidad Europea de Madrid.
- Spring '11