Exam 11: Securities and Markets

American depository receipts are receipts which represent foreign shares to U.S. investors.

The aftermarket is a period of time after an IPO.

On average and across countries, underpricing securities issues represents a significant cost to firms that issue securities.

A buy-stop order is an order to sell stock at the market price when the price of the stock falls to a specified level.

Which of the following is not a characteristic of a good market?

Under a best-effort agreement, investment bankers try to sell the securities of the issuing corporation, but they assume no risk for a possible failure of the flotation.

During a margin call, the investor is required to invest addition cash to increase the position's equity..

If a market has "price pressure" this is a sign of

If there were no secondary markets for trading between investors, there would be no primary market for the initial sale of securities.

Existing firms that are already public and wish to raise additional funds may:

Shelf registration allows firms to register only debt issues with the SEC, and have them available to sell for two years.

Over the counter markets are organized exchanges for trading securities such as the New York Stock Exchange.

IPO underpricing occurs only in the United States.

Selling more shares than you own is illegal.

The prudent use of derivatives to hedge, or reduce risk, is similar to the concept of ________________.

An IPO is the initial sale of an equity to brokers.

Which one of the following is not a primary market function of investment bankers?

Brokerage firms that not only assist in trades but also have research staffs that analyze firms and make recommendations about which stocks to buy or sell are called:

Churning happens when a broker constantly buys and sells securities from a client's portfolio in an effort to generate commissions.

A short sale is the sale of securities that the seller does not own.