____ 25. You recently sold to your brother 200 shares of
Disney stock, and the transfer was made through a broker, and the
trade occurred on the NYSE. This is an example of:
a. A futures market transaction.
b. A primary market transaction.
c. A secondary market transaction.
d. A money market transaction.
e. An over-the-counter market transaction.
____ 26. Which of the following statements is CORRECT?
a. The New York Stock Exchange is an auction market with a
physical location.
b. Capital market transactions involve only the purchase and
sale of equity securities, i.e., common stocks.
c. If an investor sells shares of stock through a broker, then
this would be a primary market transaction.
d. Consumer automobile loans are evidenced by legal documents
called "promissory notes," and these individual notes are traded in
the money market.
e. While the distinctions are blurring as investment banks are
today buying commercial banks, and vice versa, investment banks
generally specialize in lending money, whereas commercial banks
generally help companies raise capital from other parties.
____ 27. Which of the following statements is CORRECT?
a. Capital market instruments include both long-term debt and
common stocks.
b. An example of a primary market transaction would be your
uncle transferring 100 shares of Wal-Mart stock to you as a
birthday gift.
c. The NYSE does not exist as a physical location; rather, it
represents a loose collection of dealers who trade stocks
electronically.
d. If your uncle in New York sold 100 shares of Microsoft
through his broker to an investor in Los Angeles, this would be a
primary market transaction.
e. While the two frequently perform similar functions,
investment banks generally specialize in lending money, whereas
commercial banks generally help companies raise large blocks of
capital from investors.
____ 28. Which of the following statements is CORRECT?
a. While the distinctions are blurring, investment banks
generally specialize in lending money, whereas commercial banks
generally help companies raise capital from other parties.
b. A liquid security is a security whose value is derived from
the price of some other "underlying" asset.
c. Money market mutual funds usually invest most of their
money in a well-diversified portfolio of liquid common
stocks.
d. Money markets are markets for long-term debt and common
stocks.
e. The NYSE operates as an auction market, whereas the Nasdaq
is a dealer market.
____. Also, the limited partners are individually
responsible, on a pro rata basis, for the firm's debts in the event
of bankruptcy.
e. A major disadvantage of all partnerships relative to all
corporations is the fact that federal income taxes must be paid by
the partners rather than by the firm itself.
____ 32. Which of the following statements is CORRECT?
a. Corporations are at a disadvantage relative to partnerships
because they have to file more reports to state and federal
agencies, including the Securities and Exchange Administration,
even if they are not publicly owned.
b. In a regular partnership, liability for the firm's debts is
limited to the amount a particular partner has invested in the
business.
c. A fast-growth company would be more likely to set up as a
partnership for its business organization than would a slow-growth
company.
d. Partnerships have difficulty attracting capital in part
because of their unlimited liability, the lack of impermanence of
the organization, and difficulty in transferring ownership.
e. A major disadvantage of a partnership relative to a
corporation as a form of business organization is the high cost and
practical difficulty of its formation.