WEEK 3 Flashcards
(25 cards)
debt securities?
Contractual obligations to repay corporate borrowing.
money markets?
dealer markets
In what type of markets do brokers usually find someone to buy shares and also get a commission on the sale price?
Agency markets consist of brokers (or agents).
The market used by corporations when they initially sell securities is the
primary market
When issuing debt or equity to the public, firms have to disclose all material information in a(n) ______ statement.
registration
What type of claims to the residual cash flow of a firm do equity securities represent?
non-contractual
The financial markets are composed of which of the following?
money markets
capital markets
the brokers done own the shares that
they try to sell
Which of the following are types of primary market sales that corporations engage in?
private placements
public offerings
Which of the following statements regarding private placements are correct?
Unlike public issues, they tend not to be registered with regulators.
Private placements help firms save the costs of preparing registration statements.
The underwriter _____ buys the new securities from the firm and resells them at a higher price.
syndicate
Secondary markets enable the transfer of corporate ______ from one investor to another.
ownership
Which one of the following statements regarding modern dealer markets are correct.
Dealers are connected electronically.
They are also known as OTC markets.
Privately placed debt and equity are sold to large
financial institutions
Which one of the following best describes the purpose of auction markets?
They match sellers and buyers.
Recent research shows that having several stock markets on which to trade firms’ shares does not harm their value
and can make share pricing more efficient
The type of order according to which a trader can buy or sell shares at a stated price and within a reasonable time is called a(n):
Limit orders allow traders to submit buy/sell orders at a stated price within a reasonable time.
True or false: Dealer markets are called auction markets.
FALSE They are actually called over-the-counter (OTC) markets.
WHAT HAPPES IN DEALER MARKET
In a dealer market, most of the buying & selling is done by the dealer.
The process of compounding every infinitesimal instant is called:
continuous compounding
Liquidity is important because of which one of the following reasons?
Highly liquid shares have a high demand and shareholders find it easier to trade them.
What is the future value of €100 compounded continuously for 2 years at a stated annual interest rate of 10% per year?
Reason: €100 × e.10 x 2 = €122.14
to find e go book then other
The type of order, according to which a trader can buy or sell a stated number of shares immediately at the best price, is called a(n)
Reason: Buying and selling shares immediately at the best price is possible through a market order.
How frequently does continuous compounding occur?
Continuous compounding occurs every instant during the year.
