Exam 2: Financial Markets and Institutions

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Financial institutions are more diversified today than they were in the past, when federal laws kept investment banking houses, commercial banks, insurance companies, and so on quite separate. Today the larger financial corporations offer a variety of services, ranging from checking accounts, to insurance, to underwriting securities, to stock brokerages.

(True/False)

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Question 21

A share of common stock is not a derivative, but an option to buy the stock is a derivative because the value of the option is derived from the value of the stock.

(True/False)

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Question 22

Money markets are markets for

(Multiple Choice)

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Question 23

The NYSE is defined as a "spot" market purely and simply because it has a physical location. The Nasdaq, on the other hand, is not a spot market because it has no one central location.

(True/False)

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Question 24

When a corporation's shares are owned by a few individuals who are associated with the firm's management, we say that the stock is closely held.

(True/False)

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Question 25

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 26

If you decide to buy 100 shares of Google, you would probably do so by calling your broker and asking him or her to execute the trade for you. This would be defined as a secondary market transaction, not a primary market transaction.

(True/False)

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Question 27

Which of the following is a primary market transaction?

(Multiple Choice)

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Question 28

The term "Dutch auction" in a new stock offering refers to a situation where each potential bidder indicates the price they are willing to pay and how many shares they will buy at that price. The highest price that permits the company to sell all the shares it wants to sell is determined--it is the "market clearing price," and all bidders who specified that price or higher are allowed to buy their shares at the market clearing price.

(True/False)

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Question 29

Trades on the NYSE are generally completed by having a brokerage firm acting as a "dealer" buy securities and adding them to its inventory or selling from its inventory. The Nasdaq, on the other hand, operates as an auction market, where buyers offer to buy, and sellers to sell, and the price is negotiated on the floor of the exchange.

(True/False)

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Question 30

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 31

Investment banking houses today often have divisions that engage in traditional investment banking and other divisions that engage in regular commercial banking.

(True/False)

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Question 32

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 33

Showing 21 - 33 of 33

A share of common stock is not a derivative, but an option to buy the stock is a derivative because the value of the option is derived from the value of the stock.

Money markets are markets for

The NYSE is defined as a "spot" market purely and simply because it has a physical location. The Nasdaq, on the other hand, is not a spot market because it has no one central location.

When a corporation's shares are owned by a few individuals who are associated with the firm's management, we say that the stock is closely held.

Which of the following statements is CORRECT?

If you decide to buy 100 shares of Google, you would probably do so by calling your broker and asking him or her to execute the trade for you. This would be defined as a secondary market transaction, not a primary market transaction.

Which of the following is a primary market transaction?

Which of the following statements is CORRECT?

Investment banking houses today often have divisions that engage in traditional investment banking and other divisions that engage in regular commercial banking.

Which of the following statements is CORRECT?

An Overview of Financial Management

Financial Statements, Cash Flow, and Taxes

Analysis of Financial Statements

Time Value of Money

Bonds and Their Valuation

Bonds and Their Valuation

Risk and Rates of Return

Stocks and Their Valuation

The Cost of Capital

The Basics of Capital Budgeting

Cash Flow Estimation and Risk Analysis

Real Options and Other Topics in Capital Budgeting

Capital Structure and Leverage

Distributions to Shareholders: Dividends and

Working Capital Management

Financial Planning and Forecasting

Derivatives and Risk Management

Multinational Financial Management

Hybrid Financing: Preferred Stock, Leasing, Warrants, and Convertibles

Mergers and Acquisitions

Financial Management and Stock Equilibrium

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