Finance Chp 2

Market makers in dealer markets

... (not all of the above)

Functioning securities exchanges are located in

I, II, III and IV I. Brazil II. China III. Russia IV. South Korea

Which of the following can be encountered when investing in foreign markets?

I, II, III and IV I. Foreign taxation of dividends II. Different accounting standards for financial disclosure III. restrictions on types of investments IV. illiquid markets

Which one of the following statements about foreign investments is true?

Investing in foreign markets may involve specific risks not encountered with domestic securities.

Which one of the following statements about margin trading is correct?

The Federal Reserve sets the minimum margin requirement for margin trading.

A brokerage firm may set a higher margin requirement than that set by the Federal Reserve Board.

True

Assume the foreign exchange rate for the euro was U.S. $1.00 = .91 euro last month. This month, the exchange rate is U.S. $1.00 = .88 euro. This information indicates that over the past month the

euro appreciated relative to the dollar.

A stock's book value and par value are normally the same or nearly the same.

false

The U.S. stock markets tend to produce the highest rate of return each year. false

false

Including foreign investments in a portfolio

provides potential benefits from changes in currency values.

American Depositary Receipts represent

receipts for the stocks of foreign companies held by banks in the companies' home country.

A stock can have only one market value, but different investment values for different investors.

true

Diversification is the inclusion of a number of different investments in a portfolio with the goal of increasing returns or reducing risk.

true

Short selling requires the borrowing of securities.

true

The NYSE is part of the world's largest international trading network known as NYSE Euronext.

true

The preliminary version of a prospectus is called a red herring.

true