 Show 3-1 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 03 Test Bank - Static Student: ___________________________________________________________________________ Multiple Choice Questions 1. The trading of stock that was previously issued takes place A. in the secondary market. B. in the primary market. C. usually with the assistance of an investment banker. D. in the secondary and primary markets. 2. A purchase of a new issue of stock takes place A. in the secondary market. B. in the primary market. C. usually with the assistance of an investment banker. D. in the secondary and primary markets. E. in the primary market and usually with the assistance of an investment banker. 3. Firms raise capital by issuing stock A. in the secondary market. B. in the primary market. C. to unwary investors. D. only on days when the market is up. 4. Which of the following statements regarding the specialist are true? A. Specialists maintain a book listing outstanding, unexecuted limit orders. B. Specialists earn income from commissions and spreads in stock prices. C. Specialists stand ready to trade at quoted bid and ask prices. D. Specialists cannot trade in their own accounts. E. Specialists maintain a book listing outstanding, unexecuted limit orders, earn income from commissions and spreads in stock prices, and stand ready to trade at quoted bid and ask prices. 5. Investment bankers A. act as intermediaries between issuers of stocks and investors. B. act as advisors to companies in helping them analyze their financial needs and find buyers for newly-issued securities. C. accept deposits from savers and lend them out to companies. D. act as intermediaries between issuers of stocks and investors and act as advisors to companies in helping them analyze their financial needs and find buyers for newly-issued securities. 6. In a "firm commitment," the investment banker A. buys the stock from the company and resells the issue to the public. B. agrees to help the firm sell the stock at a favorable price. C. finds the best marketing arrangement for the investment-banking firm. D. agrees to help the firm sell the stock at a favorable price and finds the best marketing arrangement for the investment-banking firm. Chapter 03 - How Securities Are Traded Chapter 03 How Securities Are Traded Answer Key Multiple Choice Questions 1. The trading of stock that was previously issued takes place A. in the secondary market. B. in the primary market. C. usually with the assistance of an investment banker. D. A and B. E. B and C. Secondary market transactions consist of trades between investors. AACSB: Analytic Bloom's: Remember Difficulty: Easy Topic: Stocks 2. A purchase of a new issue of stock takes place A. in the secondary market. B. in the primary market. C. usually with the assistance of an investment banker. D. A and B. E. B and C. Funds from the sale of new issues flow to the issuing corporation, making this a primary market transaction. Investment bankers usually assist by pricing the issue and finding buyers. AACSB: Analytic Bloom's: Remember Difficulty: Easy Topic: Stocks 3-1 Which of the following orders instructs the brokerage firm to buy or sell at the current ask or bid value?A market order is an instruction to buy or sell a security immediately at the current price.
What is an order to buy or sell a security at a specific price or better?A limit order is an order to buy or sell a security at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. Example: An investor wants to purchase shares of ABC stock for no more than $10.
What type of order sells at a certain price?A limit order is an order to buy or sell a stock with a restriction on the maximum price to be paid or the minimum price to be received (the "limit price"). If the order is filled, it will only be at the specified limit price or better.
What is market order and limit order?Market orders are transactions meant to execute as quickly as possible at the current market price. Limit orders set the maximum or minimum price at which you are willing to complete the transaction, whether it be a buy or sell.
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Which of the following orders instructs the broker to sell at or above a specified price the best answer is?
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