Ch03 - How Securities Are Traded 1 Underwriting is one of...

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How Securities Are Traded 1. Underwriting is one of the services provided by ____. a. the SEC b. investment bankers c. publicly traded companies d. FDIC 2. Under firm commitment underwriting the ______ assumes the full risk that the shares cannot be sold to the public at the stipulated offering price. a. red herring b. issuing company c. initial stockholder
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d. underwriter 3. Explicit costs of an IPO tend to be around ______ of the funds raised. a. 1% b. 7% c. 15% d. 25% 4. Barnegat Light sold 200,000 shares in an initial public offering. The underwriter's explicit fees were $70,000. The offering price for the shares was $25, but immediately upon issue, the share price jumped to $41. What is the best estimate of the total cost to Barnegat Light of the equity issue? a. $ 70,000 b. $3,200,000
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c. $3,270,000 d. $8,200,000 5. A red herring becomes a prospectus when _____. a. the preliminary registration statement is approved by the SEC b. the IPO is seasoned c. the offering is seasoned d. none of the above 6. Spring Street Brewing Company was the first company to _____. a. have a micro brewery
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b. have an internet IPO c. sue an investment banker for under pricing d. sell beer over the internet 7. A level _____ subscriber to the NASDAQ system may enter bid and ask prices. a. 1 b. 2 c. 3 d. 4 8. The largest and most liquid companies trading over-the-counter are ______. a.
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listed on pink sheets b. posted on the OTC Bulletin Board c. listed on the NASDAQ National Market System d. listed on the NASDAQ Small Cap Market 9. An ECN is _______. a. an Easy Cash Network b. a European Community Nationalbank c. part of the fourth market d. a special regulatory unit of the SEC 10. Instinet is _______.
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a. an electronic communications network b. a regional stock exchange c. a day trading firm d. an internet broker 11. About ______ of all trades were initiated over the internet in 1999. a. 1% b. 10% c. 20% d. 50%
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12. A ______ drop in the Dow Jones Industrial Average would stop trading for the day. a. 10% b. 20% c. 30% d. 40% 13. The computer-linked price quotation system for the OTC is called __________. a. CRSP b. DAX c. NASDAQ
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d. the Big Board 14. Purchases of new issues of stock take place __________. a. at the desk of the Fed b. in the primary market c. in the secondary market d. none of the above 15. Initial margin requirements on stocks are set by __________. a. the Federal Deposit Insurance Corporation b. the Federal Reserve c.
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d. the Securities and Exchange Commission 16. A fund that invests in real estate or loans secured by real estate is __________. a. a HYCorp b. a MLSF c. an REIT d. none of the above 17. __________ is a false statement regarding specialists. a.
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Ch03 - How Securities Are Traded 1 Underwriting is one of...

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