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Question;[i]. Money markets are markets;for;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.;(2-2) Fin. mkt. transactions F;H;[ii]. Which of the following statements is CORRECT?;a. If you purchase;100 shares of Disney stock from your brother-in-law, this is an example of a;primary market transaction.;b. If Disney issues additional shares of common;stock through an investment banker, this would be a secondary market;transaction.;c. The NYSE is;an example of an over-the-counter market.;d. Only institutions;and not individuals, can engage in derivative market transactions.;e. As they are generally defined, money market transactions involve debt securities;with maturities of less than one year.;(2-2) Fin. mkt. transactions F;H;[iii]. You recently sold 200 shares of Disney stock, and the transfer was;made through a broker. This is an;example of;a. A money market transaction.;b. A primary market transaction.;c. A secondary market transaction.;d. A futures market transaction.;e. An over-the-counter market transaction.;(2-3) Hedge funds F;H;[iv]. Which of the following;statements is CORRECT?;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.;(2-4) Fin. mkts. & institutions F H;[v]. Which of the following statements;is CORRECT?;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.;(2-4) Financial markets F;H;[vi]. Which of the following statements is CORRECT?;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.;(2-5) IPOs F;H;[vii]. Which of the following statements;is CORRECT?;a. The term "IPO" stands for;Introductory Price Offered, and it is;the price at which shares of a new company are offered to the public.;b. IPO prices are generally established by the market, and buyers of the new stock;must pay the price that prevails at the close of trading on the day the stock;is offered to the public.;c. In a "Dutch auction," investors who;want to buy shares in an IPO submit;bids indicating how many shares they want to buy and the price they are willing;to pay. The company determines how many;shares it wants to sell. The highest;price that enables the company to sell the desired number of shares is the;price that all buyers must pay.;d. It is possible that the price set in an IPO is;so high that investors will refuse to buy the number of shares that the company;wants to sell. In this situation, the;IPO is said to be oversubscribed.;e. It is possible that the price set in an IPO is so low that investors will want to buy;more shares than the company wants to sell.;In that case, the company will have to issue more shares than it wants;to sell.;(2-4) Financial markets F;H;[viii]. Which of the following statements;is CORRECT?;a. The most important difference between spot;markets versus futures markets is the maturity of the instruments that are;traded. Spot market transactions involve;securities that have maturities of less than one year whereas futures markets;transactions involve securities with maturities greater than one year.;b. Capital market transactions involve only preferred stock or common stock.;c. If General Electric were to issue new stock;this year, this would be considered a secondary market transaction since the;company already has stock outstanding.;d. Both Nasdaq dealers and "specialists;on the NYSE hold inventories of;stocks.;e. Money market transactions do not involve securities denominated in currencies other;than the U.S. dollar.


Paper#55051 | Written in 18-Jul-2015

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