Question

21.

Which of the following is not a short-term debt instrument?

Group of answer choices

commercial paper

common stock

money market securities

Treasury bills




22.

Which of the following is a primary market transaction?

Group of answer choices

You sell 200 shares of IBM stock on the NYSE through your broker.

You buy 200 shares of IBM stock from your brother. The trade is not made through a broker—you just give him cash and he gives you the stock.

IBM issues 2,000,000 shares of new stock and sells them to the public.

One financial institution buys 200,000 shares of IBM stock from another institution. An investment banker arranges the transaction.



23.

Which of the following statements is CORRECT?

Group of answer choices

If you purchase 100 shares of Disney stock from your brother-in-law, this is an example of a primary market transaction.

If Disney issues additional shares of common stock through an investment banker, this would be a secondary market transaction.

The NYSE is an example of an over-the-counter market.

Only institutions, and not individuals, can engage in the derivatives markets.

As they are generally defined, money market transactions involve debt securities with maturities of less than one year.

Answer 1

Ans 21) common stock

Common stock or equity shares are not debt instruments. They do not get fixed interest rates.

Ans 22) IBM issues 2,000,000 shares of new stock and sells them to the public.

Primary market transaction are stocks that are sold for the first time. These are also known as IPO (Initial Public offering)

Ans 23) As they are generally defined, money market transactions involve debt securities with maturities of less than one year.

Examples of money market instrument include commercial paper, certificate of deposit.