Question 1

Primary markets are large and important,while secondary markets are smaller and less important.

Accepted Answer

A) True 
 B)False

Question 2

Private markets are those like the NYSE,where transactions are handled by members of the organization,while public markets are those like the NASDAQ,where anyone can make transactions.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is CORRECT?

Accepted Answer

A)  Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States.
B)  Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia.
C)  Hedge funds have more in common with investment banks than with any other type of financial institution.
D)  Hedge funds have more in common with commercial banks than with any other type of financial institution.
E)  Hedge funds are not as highly regulated as most other types of financial institutions. The justification for this light regulation is that only "sophisticated investors" (i.e., those with high net worths and high incomes)  are permitted to invest in these funds, and these investors supposedly can do any necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.F) A) and B)
G) A) and C)

Question 4

The term IPO stands for "individual purchase order," as when an individual (as opposed to an institution)places an order to buy a stock.

Accepted Answer

A) True 
 B)False

Question 5

In a "Dutch auction" for new stock,individual investors place bids for shares directly.Each potential bidder indicates the price he or she is willing to pay and how many shares he or she will purchase at that price.The highest price that permits the company to sell all the shares it wants to sell is determined,and this is the "market clearing price." All bidders who specified this price or higher are allowed to purchase their shares at the market clearing price.

Accepted Answer

A) True 
 B)False

Question 6

Money markets are markets for

Accepted Answer

A)  Foreign currencies.
B)  Consumer automobile loans.
C)  Common stocks.
D)  Long-term bonds.
E)  Short-term debt securities such as Treasury bills and commercial paper.F) A) and D)
G) C) and D)

Question 7

Which of the following is a primary market transaction?

Accepted Answer

A)  You sell 200 shares of IBM stock on the NYSE through your broker.
B)  You buy 200 shares of IBM stock from your brother. The trade is not made through a broker; you just give him cash and he gives you the stock.
C)  IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker.
D)  One financial institution buys 200,000 shares of IBM stock from another institution. An investment banker arranges the transaction.
E)  IBM sells 2,000,000 shares of treasury stock to its employees when they exercise options that were granted in prior years.F) B) and D)
G) A) and E)

Question 8

A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital.A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.

Accepted Answer

A) True 
 B)False

Question 9

If you decide to buy 100 shares of Google,you would probably do so by calling your broker and asking him or her to execute the trade for you.This would be defined as a secondary market transaction,not a primary market transaction.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is CORRECT?

Accepted Answer

A)  The New York Stock Exchange is an auction market, and it has a physical location.
B)  Home mortgage loans are traded in the money market.
C)  If an investor sells shares of stock through a broker, then it would be a primary market transaction.
D)  Capital markets deal only with common stocks and other equity securities.
E)  While the distinctions are blurring, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties.F) C) and D)
G) B) and C)

Question 11

Which of the following statements is CORRECT?

Accepted Answer

A)  While the distinctions are becoming blurred, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties.
B)  The NYSE operates as an auction market, whereas NASDAQ is an example of a dealer market.
C)  Money market mutual funds usually invest their money in a well-diversified portfolio of liquid common stocks.
D)  Money markets are markets for long-term debt and common stocks.
E)  A liquid security is a security whose value is derived from the price of some other "underlying" asset.F) A) and B)
G) A) and C)

Question 12

You recently sold 100 shares of Microsoft stock to your brother at a family reunion.At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates.Which of the following best describes this transaction?

Accepted Answer

A)  This is an example of a direct transfer of capital.
B)  This is an example of a primary market transaction.
C)  This is an example of an exchange of physical assets.
D)  This is an example of a money market transaction.
E)  This is an example of a derivative market transaction.F) B) and E)
G) A) and E)

Question 13

Which of the following statements is CORRECT?

Accepted Answer

A)  The NYSE does not exist as a physical location. Rather it represents a loose collection of dealers who trade stock electronically.
B)  An example of a primary market transaction would be your uncle transferring 100 shares of Walmart stock to you as a birthday gift.
C)  Capital market instruments include both long-term debt and common stocks.
D)  If your uncle in New York sold 100 shares of Microsoft through his broker to an investor in Los Angeles, this would be a primary market transaction.
E)  While the two frequently perform similar functions, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise large blocks of capital from investors.F) B) and D)
G) A) and D)

Exam 2: Financial Markets and Institutions

Which of the following statements is CORRECT?

Correct Answer
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Private markets are those like the NYSE,where transactions are handled by members of the organization,while public markets are those like the NASDAQ,where anyone can make transactions.

Correct Answer
verified

If you decide to buy 100 shares of Google,you would probably do so by calling your broker and asking him or her to execute the trade for you.This would be defined as a secondary market transaction,not a primary market transaction.

Correct Answer
verified

A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital.A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.

Correct Answer
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Which of the following is a primary market transaction?

Correct Answer
verified

Primary markets are large and important,while secondary markets are smaller and less important.

Correct Answer
verified

The term IPO stands for "individual purchase order," as when an individual (as opposed to an institution)places an order to buy a stock.

Correct Answer
verified

You recently sold 100 shares of Microsoft stock to your brother at a family reunion.At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates.Which of the following best describes this transaction?

Correct Answer
verified

Which of the following statements is CORRECT?

Correct Answer
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Correct Answer
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Money markets are markets for

Correct Answer
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Which of the following statements is CORRECT?

Correct Answer
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Which of the following statements is CORRECT?

Correct Answer
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Exam 2: Financial Markets and Institutions

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

Private markets are those like the NYSE,where transactions are handled by members of the organization,while public markets are those like the NASDAQ,where anyone can make transactions.

Correct AnswerverifiedShow Answer

If you decide to buy 100 shares of Google,you would probably do so by calling your broker and asking him or her to execute the trade for you.This would be defined as a secondary market transaction,not a primary market transaction.

Correct AnswerverifiedShow Answer

A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital.A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.

Correct AnswerverifiedShow Answer

Which of the following is a primary market transaction?

Correct AnswerverifiedShow Answer

Primary markets are large and important,while secondary markets are smaller and less important.

Correct AnswerverifiedShow Answer

The term IPO stands for "individual purchase order," as when an individual (as opposed to an institution)places an order to buy a stock.

Correct AnswerverifiedShow Answer

You recently sold 100 shares of Microsoft stock to your brother at a family reunion.At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates.Which of the following best describes this transaction?

Correct AnswerverifiedShow Answer

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Money markets are markets for

Correct AnswerverifiedShow Answer

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

Correct Answer
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