Knowledge of Capital Markets - Market Structure
All of the following are true regarding the term market EXCEPT A)it is unique to the U.S. securities industry B)it can be a physical place or an electronic venue C)it is where buyers and sellers come together for the purpose of trading assets D)it includes stock exchanges
A
A corporation sells shares to the investing public in order to raise capital. This is known as A)a secondary market transaction B)a primary, or investor-to-investor, transaction C)an issuer transaction D)an exchange market execution
C
A market in which exchange-listed securities are traded in the OTC market would BEST be described as the A)Fourth Market B)First Market C)Third Market D)Second Market
C
In the capital markets, securities such as stocks and bonds can be A)purchased and sold by institutions only B)offered by the public sector only C)offered by both public and private sectors D)purchased and sold by individuals only
C
Raising funds is generally accomplished by corporations through the issuance of stock (equity) or bonds (debt). This is done in A)the currency market B)the secondary market C)the capital market D)the funding market
C
When investors buy and sell securities to and from one another, these transactions occur A)on exchanges only B)in the over-the-counter market only C)in the secondary market D)in the primary market
C
Which of the following is TRUE regarding the primary market? A)It is regulated by the Securities Act of 1934. B)The NYSE is an example of a primary market. C)Issuer transactions occur in the primary market. D)Price is determined by supply and demand.
C
A corporation needs to build a new manufacturing facility costing several hundred million dollars. In which of the following markets could this new capital be raised? A)Secondary market B)Municipal bond market C)Government bond market D)Capital market
D
A stock's market value is directly determined by which of the following? A)Vote of the stockholders B)Board of directors C)Company's financial condition D)Supply and demand
D
It is expected that financial markets A)have securities prices determined by a board of directors B)be nonregulated to allow for free trade C)be limited to stocks and bonds and not include derivatives like options. D)have transparent pricing for assets
D
For primary and secondary markets, which of the following is TRUE? A)In the secondary market, all sales proceeds go to the issuer. B)In the primary market, securities are sold to the public and the issuer receives the sale proceeds. C)In the secondary market, securities transactions cannot take place on an exchange. D)In the primary market, securities are purchased from and sold to individual investors.
B
Which of the following statements is TRUE? A)Only municipalities can raise funds in the capital markets. B)Municipalities, the federal government, and corporations can raise funds in the capital markets. C)Only the federal government and municipalities can raise funds in the capital markets. D)Only corporations can raise funds in the capital markets.
B
For the primary market, which of the following is TRUE? A)Issuer transactions occur in the primary market, and price is determined by supply and demand. B)Issuer transactions occur in the primary market, and securities are offered at a public offering price. C)All U.S. exchanges are primary markets, where securities are offered at a public offering price. D)All U.S. exchanges are primary markets, where price is determined by supply and demand.
B
Which of the following statements would describe the Fourth Market? A)These transactions take place through electronic communications networks (ECNs). ECNs are open 24 hours a day and act solely as principals B)These transactions take place through electronic communications networks (ECNs) which are open during normal trading hours and act solely as principals C)A market for institutional investors in which large blocks of stock, both listed and unlisted, trade in transactions unassisted by broker-dealers. D)The after-hours market
C