Exam 3: Securities Markets

What is the capital raising process referred to in the situation where an investor has been offered the option of buying a number of shares related to the size of his existing holding?

________ is an example of explicit transaction costs.

An order to buy or sell a security at the current price is a ________.

You sell short 200 shares of Doggie Treats Inc. which are currently selling at $25 per share. You post the 50% margin required on the short sale. If your broker requires a 30% maintenance margin, at what share price will you get a margin call? (You earn no interest on the funds in your margin account and the firm does not pay any dividends.)

Which of the following are true concerning short sales of exchange listed shares? I. A short sale is permitted only if the last recorded change in the share's price was positive II. Proceeds from the short sale must be kept on deposit with the broker III. Short-sellers must post margin with their broker to cover potential losses on the position IV. The short-seller earns interest on any cash deposited with the broker that is used to meet the margin requirement

The inside quotes on a limit order book would comprise the ________.

Purchases of new issues of share take place ________.

The over-the-counter securities market is a good example of ________.

You short-sell 200 shares of Tuckerton Trading Co., now selling for $50 per share. What is your maximum possible gain, ignoring transaction costs?

Assume you purchased 500 of XYZ common shares on margin at $40 per share from your broker. If the initial margin is 60%, the amount you borrowed from the broker is ________.

The Australian Securities Exchange (ASX) is an example of ________.

You purchased 200 shares in ABC on margin at $50 per share. Assume the initial margin is 50% and the maintenance margin is 30%. You will get a margin call if the share drops below ________. (Assume the share pays no dividends and ignore interest on the margin loan.)

You want to buy shares of ABC, but the current share price is too high given the firm's prospects. What type of trading order might you give to your broker?

If the bid price is $15.12 and the ask price is $15.14, the bid-ask spread is ________.

As a type of secondary capital raising, ________ has the largest potential for ownership dilution.

For ________, the share is to be sold if its price falls below a stipulated level.

A company must release a prospectus ________.

In Australia, the allowable margin usually ranges ________.

________ is difficult to estimate, even after a trade has occurred.

Initial public offerings (IPOs) are usually ________ relative to the levels at which their prices stabilise after they begin trading in the secondary market.