Question

1A Further Public Offering (FPO) is made on which market: Primary Market Secondary Market Third Market...

1A Further Public Offering (FPO) is made on which market:

Primary Market

Secondary Market

Third Market

Fourth Market

2The difference between the primary and secondary markets include:

Primary markets and secondary markets have fixed stock prices

The primary market is not subject to commissions nor is the secondary market

Primary markets and secondary markets are both open for an unlimited period of time

The primary market is not subject to commissions and the secondary market is subject to commissions

3The total rate of return is calculated using

Interest and dividends provided by the investment

Increases and decreases in asset value

Cost basis

All of the above

None of the above

4In regards to risk and speculation:

Risk and speculation are essentially the same

Risk is tied to the capital gains and losses of the asset

Speculation is an investment that offers a larger return but is also very risky

Stocks have similar risk profiles

5 Market makers:

Take the highest price for the asset and offer it to buyers

Price according to the mid-point of the bid and offer

Can only make a market in equities

Create a market using the lowest price for the asset

6When shorting a stock

Investors borrow against their own holdings and use their own stock to earn a spread

An investor is anticipating an increase in sales price

An investor is anticipating a decrease in sales price

Investors borrow shares from other investors to earn a spread from the change in price

Both a and c

Both c and d

Homework Answers

Answer #1

1A FPO(Further Public Offering) allows the shareholders to directly purchase securities from the market and hence, it is a primary market. The 1st option is the answer.

2 The primary difference between the primary and secondary markets include that primary markets is not subject to comissions whereas the secondary market is. Therefore, the 4th option.

3. The total rate of return can be calculates using interests and dividends provided by the investment or either increases or decreases in asset value and hence, all of the above is the answer.

4 Speculation risk is a type of risk which can ne calculated and hence, they are essentially the same. The first opyion is the answer.

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