Exam 20: The Truth About Regulation Fd and Stock Holdings: Debunking Common Myths in the Financial Market

Participants on an exchange who trade in one or a limited number of shares of stock are called:

The NASDAQ, an over-the-counter (OTC) market, has registered and supervises more than ________ brokerage firms and more than _________ securities representatives.

A growing volume of stock trading at exchanges outside the U.S. is due, in part, to privatization of many state-owned businesses.

The stock market is a barometer of business expectations regarding future investment, but because it has no tangible impact on interest rates it likely does not influence employment, growth and the general health of the economy.

Investors use a put option contract to protect their profit potential while hedging against a price decline.

In the U.S. stock market the bulk of trading activity takes place in the secondary (resale) market rather than the primary (new capital funds) market.

Most corporations rely primarily on retained earnings to meet their funding needs, but these earnings may not always be sufficient to match the investment expenditures a corporation would like to make and therefore the firm needs to turn to the debt and equity markets.

The price of a stock option is known as the:

Electronic communication networks (ECNs) allow trading to take place in stocks listed on virtually all major equity markets, with trading hours each day substantially:

The specialist firms operating in the stock exchange act as both _______, buying and selling for other brokers and for themselves when there is any imbalance between supply and demand.

A corporation cannot pay any dividends to stockholders which would reduce the company's net worth per share below the par value of its stock.

Dynamic hedging programs consider the current prices of stock, options, futures and futures options, among other factors.

If a firm relies too heavily on ________ for financing it may send a signal to the market that its stock is overvalued, at which point investors may sell the stock, decreasing the price of the stock.

Using the the description or the definition below, identify each of the key terms and concepts presented in this chapter a. Rules for trading on a securities exchange that bring a halt to trading or slow trading under certain circumstances. b. Dollar-denominated claims on specific foreign shares of stock held in safekeeping by U.S. financial institutions. c. A theory of stock price movements that contends that the future path of stock prices is no more predictable than a series of random numbers.

The second largest economy in the world is China.

The portion of the global market for corporate stock that is devoted to new stock issues is declining rapidly today.

Treasury shares can be reissued without additional filing fees in the future, should the firm wish to tap the equity market for funds.

A contract representative of the whole stock market in which no securities, only cash, are delivered to settle the contract is known as a:

Electronic communication networks (ECNs) allowed trading to take place in stocks listed on virtually all major equity markets with trading hours each day substantially lengthened.

When adjusted for risk larger firms tend to post higher returns on their stock than the stock returns of smaller companies; this phenomenon is known as the small firm effect.