Exam 10: Securities Markets: Trading Financial Resources

The advantage of electronic communication networks (ECNs) is that they:

In the context of issuing and trading securities, briefly discuss the primary and secondary markets.

Davis frequently trades on the NASDAQ exchange. He has made a commitment to constantly buy and sell the stocks of Ossani & Gautier, an automobile manufacturing company that is listed on the exchange. He competes for customer order flow by quoting the bid price and the ask price for a number of shares. The information given in the scenario indicates that Davis is a(n) _____.

Which of the following is the main reason for private placements being less expensive than public offerings?

Ecclestone Corporation plans to go for an initial public offering and, therefore, seeks the help of an investment bank in issuing the new securities. The bank agrees to help the company in finding potential buyers and providing advice on the pricing of the securities. However, the bank does not guarantee that it will accomplish the task of selling all of the company's securities at a high price. In this scenario, the investment bank is using a _____ approach.

Investors who employ a buy-and-hold investment approach invest in index mutual funds and exchange-traded funds.

Institutional investors:

In which of the following strategies for investing do investors buy low-risk securities, thereby getting a relatively low return because the market value of low-risk securities seldom increases much over time?

William holds shares of preferred stock in a telecommunications company. However, given the lucrative benefits that come with holding common stock, William exchanges his shares of preferred stock with shares of common stock at the conversion price. In this scenario, William was holding _____ in preferred stock.

A wave of bank failures occurred in the United States in the early 1930s as the economy sank into the Great Depression. Congress responded by passing the _____ of 1933.

Charles, a 62-year-old army veteran, buys preferred stocks in companies. Although the returns on these stocks are not high, he is more than happy with his investments as they bring a steady flow of money that helps him in his sustenance. Charles's investment approach is an example of the strategy of _____.

A(n) _____ is a financial intermediary that specializes in helping firms raise financial capital by issuing securities in primary markets.

Which of the following is true of financial diversification?

Each year, Arnold receives a stated amount of dividend from the earnings of the company he has stocks in. In a particular period, if the company skips the dividend, then Arnold will receive the accumulated amount, that is, the dividend of that period plus the amount of the dividend the company skipped in the previous period. Based on the information given in the scenario, Arnold is most likely a holder of:

Jonathan is a common stockholder in an information technology firm. Owing to his right to a residual claim on assets, he is entitled to receive a share in the proceeds of the company that is proportionate to his ownership if the company:

The Willsborough Growth Trust, an institutional investor, issues a fixed number of shares among investors. However, this is not how the trust makes its profit. For maximum returns, it uses the money received from selling its shares to investors and puts it in a portfolio of assets. This scenario is reflective of:

In the context of the various strategies for investing in securities, which of the following is a drawback of value investing?

Clanston Corp., a steel manufacturing giant, announces its plans to merge with another steel manufacturing company, Tralesta Corp. Peter is a major stockholder in Clanston Corp., and his experience suggests that the merger is not going to be a profitable one. Which of the following basic shareholder rights must Peter use to express his disapproval of the merger?

Dividends of a company are:

National Association of Securities Dealers Automated Quotation System (NASDAQ) started as a physical location where brokers met to buy and sell stocks for their clients.