Question 1

Investors in financial assets receive ________.

Accepted Answer

A)  illiquidity for their assets. 
B)  information about the assets' fair or consensus values. 
C)  increased the costs of searching for likely buyers and sellers of assets. 
D)  the disadvantage of higher transaction costs. 
A)  illiquidity for their assets. 
B)  information about the assets' fair or consensus values. 
C)  increased the costs of searching for likely buyers and sellers of assets. 
D)  the disadvantage of higher transaction costs.

Question 2

One indication of the usefulness of secondary markets is that they exist throughout ________.

Accepted Answer

A)  the United States. 
B)  Europe and Asia. 
C)  each state. 
D)  the world. 
A)  the United States. 
B)  Europe and Asia. 
C)  each state. 
D)  the world.

Question 3

What can investors expect to obtain in an operationally efficient market? Does this efficiency vary throughout the world?

Accepted Answer

In an operationally efficient market, in

Question 4

There are several related reasons for the transition to the electronic trading of bonds. Which of the below reasons is NOT one of these?

Accepted Answer

A)  The profitability of bond market making has declined since many of the products have become less commodity-like. 
B)  The increase in the volatility of bond markets has increased the capital required of bond broker-dealers. 
C)  Making markets in bonds has become more risky for the market makers because the size of the orders has increased tremendously. 
D)  The profitability of bond market making has declined and their bid-offer spreads have decreased. 
A)  The profitability of bond market making has declined since many of the products have become less commodity-like. 
B)  The increase in the volatility of bond markets has increased the capital required of bond broker-dealers. 
C)  Making markets in bonds has become more risky for the market makers because the size of the orders has increased tremendously. 
D)  The profitability of bond market making has declined and their bid-offer spreads have decreased.

Question 5

Which of the below statement is FALSE?

Accepted Answer

A)  According to the exchange system, dealer and customer bids and offers are entered into the system on an anonymous basis, and the clearing of the executed trades is done through a common process. 
B)  Although there is a common clearinghouse for bonds, there is none for common stocks. 
C)  According to the exchange system, dealer and customer bids and offers are entered into the system on an anonymous basis, and the clearing of the executed trades is done through a common process., 
D)  The exchange system is quite different rom the dealer-to-customer systems and has potentially significantly greater value added. 
A)  According to the exchange system, dealer and customer bids and offers are entered into the system on an anonymous basis, and the clearing of the executed trades is done through a common process. 
B)  Although there is a common clearinghouse for bonds, there is none for common stocks. 
C)  According to the exchange system, dealer and customer bids and offers are entered into the system on an anonymous basis, and the clearing of the executed trades is done through a common process., 
D)  The exchange system is quite different rom the dealer-to-customer systems and has potentially significantly greater value added.

Question 6

The key distinction between a primary market and a secondary market is that, in the secondary market, ________.

Accepted Answer

A)  funds flow from the seller of the asset to the buyer. 
B)  the issuer of the asset receives funds from the buyer. 
C)  funds flow from the buyer of the asset to the seller. 
D)  the existing issue changes hands in the primary market. 
A)  funds flow from the seller of the asset to the buyer. 
B)  the issuer of the asset receives funds from the buyer. 
C)  funds flow from the buyer of the asset to the seller. 
D)  the existing issue changes hands in the primary market.

Question 7

________ refers to a market where prices at all times fully reflect all available information that is relevant to the valuation of securities.

Accepted Answer

A)  Internal inefficiency 
B)  External efficiency 
C)  Operational efficiency 
D)  Pricing efficiency 
A)  Internal inefficiency 
B)  External efficiency 
C)  Operational efficiency 
D)  Pricing efficiency

Question 8

A perfect market does not allow the sale of borrowed securities.

Accepted Answer

A) True 
 B)False

Question 9

There are a variety of types of electronic trading systems for bonds. The two major types of electronic trading systems are ________.

Accepted Answer

A)  the customer-to-dealer systems and the exchange systems. 
B)  the dealer-to-customer systems and the leverage systems. 
C)  the broker-to-dealer systems and the exchange systems. 
D)  the dealer-to-customer systems and the exchange systems. 
A)  the customer-to-dealer systems and the exchange systems. 
B)  the dealer-to-customer systems and the leverage systems. 
C)  the broker-to-dealer systems and the exchange systems. 
D)  the dealer-to-customer systems and the exchange systems.

Question 10

Secondary markets hurt investors by providing liquidity.

Accepted Answer

A) True 
 B)False

Question 11

A perfect market is free of transactions costs and any impediment to the interaction of supply and demand for the commodity. Economists refer to these various costs and impediments as frictions. In regards to financial markets, describe four of impediments or frictions.

Accepted Answer

The costs associated with frictions gene

Question 12

Some markets conduct the day's initial trades with a call method and most other trades in a continuous way.

Accepted Answer

A) True 
 B)False

Question 13

What is a broker and how can a broker act on behalf of an investor.

Accepted Answer

A broker is an entity that acts on behal

Question 14

In a call market, the auction may be oral but not written.

Accepted Answer

A) True 
 B)False

Question 15

Two roles that dealers play include: providing reliable price information to market participants, and, in certain market structures, providing the services of an auctioneer in bringing order and fairness to a market.

Accepted Answer

A) True 
 B)False

Exam 14: Secondary Markets

Investors in financial assets receive ________.

One indication of the usefulness of secondary markets is that they exist throughout ________.

What can investors expect to obtain in an operationally efficient market? Does this efficiency vary throughout the world?

There are several related reasons for the transition to the electronic trading of bonds. Which of the below reasons is NOT one of these?

Which of the below statement is FALSE?

The key distinction between a primary market and a secondary market is that, in the secondary market, ________.

________ refers to a market where prices at all times fully reflect all available information that is relevant to the valuation of securities.

A perfect market does not allow the sale of borrowed securities.

There are a variety of types of electronic trading systems for bonds. The two major types of electronic trading systems are ________.

Secondary markets hurt investors by providing liquidity.

A perfect market is free of transactions costs and any impediment to the interaction of supply and demand for the commodity. Economists refer to these various costs and impediments as frictions. In regards to financial markets, describe four of impediments or frictions.

Some markets conduct the day's initial trades with a call method and most other trades in a continuous way.

What is a broker and how can a broker act on behalf of an investor.

In a call market, the auction may be oral but not written.

Two roles that dealers play include: providing reliable price information to market participants, and, in certain market structures, providing the services of an auctioneer in bringing order and fairness to a market.

Introduction

Financial Institutions, Financial Intermediaries, and Asset Management Firms

Depository Institutions: Activities and Characteristics

The U.S. Federal Reserve and the Creation of Money

Monetary Policy in the United States

Insurance Companies

Investment Companies and Exchange Traded Funds

Pension Funds

Properties and Pricing of Financial Assets

The Level and Structure of Interest Rates

The Term Structure of Interest Rates

Risk/Return and Asset Pricing Models

Primary Markets and the Underwriting of Securities

Treasury and Agency Securities Markets

Municipal Securities Markets

Markets for Common Stock: The Basic Characteristics

Markets for Common Stock: Structure and Organization

Markets for Corporate Senior Instruments: I

Markets for Corporate Senior Instruments: II

The Markets for Bank Obligations

The Residential Mortgage Market

Mortgage-Backed Securities Market

Market for Commercial Mortgage Loans and Commercial Mortgage-Backed Securities

Market for Asset-Backed Securities

Financial Futures Markets

Options Markets

Pricing of Futures and Options Contracts

The Applications of Futures and Options Contracts

OTC Interest Rate Derivatives: Forward Rate Agreements, Swaps, Caps, and Floors

Market for Credit Risk Transfer Vehicles: Credit Derivatives and Collateralized Debt Obligations

The Market for Foreign Exchange and Risk Control Instruments

Filters