Investment fundamentals ch 2 & 3 & 4

Under SEC rules, the managers of certain funds are allowed to deduct charges for advertising, brokerage commissions, and other sales expenses directly from the fund assets rather than billing investors. These fees are known as ____________. direct operating expenses back-end loads 12b-1 charges front-end loads

12b-1 charges

According to SEC Rule 415 regarding shelf registration, firms can gradually sell securities to the public for __________ following initial registration. 4 years 2 years 3 years 1 year

2 years

Here is some price information on Fincorp stock. Suppose first that Fincorp trades in a dealer market. Bid Asked 55.25 55.50 a. Suppose you have submitted an order to your broker to buy at market. At what price will your trade be executed? (Round your answer to 2 decimal places.) B. Suppose you have submitted an order to sell at market. At what price will your trade be executed? (Round your answer to 2 decimal places.) C. What will happen suppose you have submitted a limit order to sell at $55.62. D. What will happen suppose you have submitted a limit order to buy at $55.37.

A. 55.50 B. 55.25 C. Trade not executed. Limit order sell is higher than the bid price D. Limit order buy is less than the ask price. Trade not executed.

The difference between the price at which a dealer is willing to buy and the price at which a dealer is willing to sell is called the _________. market spread bid-ask gap bid-ask spread market variation

Bid-ask spread

The process of polling potential investors regarding their interest in a forthcoming initial public offering (IPO) is called ________. customer identification interest building book building market analysis

Book Building

A dollar-denominated deposit at a London bank is called _____. Eurodollars LIBOR Fed Funds Bankers' Acceptance

Eurodollars

In a __________ underwriting arrangement, the underwriter assumes the full risk that shares may not be sold to the public at the stipulated offering price. best-efforts private placement firm-commitment none of these options

Firm-commitment

Purchases of new issues of stock take place _________. in the money markets in the secondary market in the primary market at the desk of the Fed

In the primary market

The bulk of most initial public offerings (IPOs) of equity securities goes to ___________. the firm's current shareholders individual investors institutional investors day traders

Institutional investors

Net Asset Value (NAV) is defined as ________________________. book value of assets divided by shares outstanding book value of assets minus liabilities divided by shares outstanding market value of assets divided by shares outstanding market value of assets minus liabilities divided by shares outstanding

Market value of assets minus liabilities divided by shares outstanding

A market order has: Price uncertainty and execution uncertainty Price uncertainty but not execution uncertainty Execution uncertainty but not price uncertainty neither price uncertainty or execution uncertainty

Price uncertainty but not execution uncertainty

The term "underwriting syndicate" describes _______. the issuing firm the investment banks that participate in the underwriting the lead underwriter the private investors that purchase the shares

The Investment banks that participate in the underwriting

The bid price of a US Treasury Bill is _________. the price at which a dealer in US Treasury Bills is willing to sell the bill the price at which a dealer in US Treasury Bills is willing to buy the bill greater than the ask price of the US Treasury Bill expressed in dollar terms the price at which an investor can buy the US Treasury Bill

The price at which a dealer in the US treasury bills is willing to buy the bill

Under firm-commitment underwriting, the ______ assumes the full risk that the shares cannot be sold to the public at the stipulated offering price. initial stockholder red herring underwriter issuing company

Underwriter

Which of the following is not a money market instrument? US Treasury Bill Commercial Paper Preferred Stock Bankers' Acceptance

preferred stock

TIPS are ______. Treasury bonds that pay no interest and are sold at a discount U.K. bonds that protect investors from default risk securities that trade on the Toronto stock index Treasury bonds that protect investors from inflation

Treasury Bonds that protect investors from inflation

Which of the following is not a characteristic of common stock ownership? residual claimant unlimited liability voting rights right to any dividend paid by the corporation.

Unlimited Liability

The most marketable money market security is _____. US Treasury Bills Bankers' Acceptances Certificates of Deposit Common Stock

Us Treasury Bills