10._____The maturity “cutoff” between money markets and capital markets is
a. over night.
b. one month.
c. three months.
d. one year.
e. five years.
11._____Taylor buys 100 shares of Uber when Uber does its IPO. This transaction is necessarily an example of a
a. good purchase.
b. bad purchase.
c. secondary market transaction.
d. primary market transaction.
e. good sale.
12.______Taylor sells 50 of the Uber shares to Thao. This transaction is necessarily an example of a
a. good purchase.
b. bad purchase.
c. secondary market transaction.
d. primary market transaction.
e. good sale.
13._____When does a “red herring” become a prospectus?
a. when it goes to the printer.
b. when the issue is placed, i.e., the deal is done.
c. when it is pickled and fileted.
d. when it is caught.
e. when the issue fails.
14._____According to your instructor, the underwriting process is fraught with risk, exposing the lead underwriter, the underwriting syndicate, and the selling group to dire financial peril.
a. yes
b. no
15._____Curency risk is a characteristic of
a. domestic stocks.
b. international stocks.
c. EU stocks.
d. all of the above.
e. more than one, but not all, of the above.
16._____Over the last ten or so years, markets have been characterized by
a. declining bid/ask spreads.
b. increasing bid/ask spreads.
c. elimination of bid/ask spreads.
d. increasing commissions.
e. elimination of risk premia.
17._____When you are long a stock and have not borrowed to become long, the limit to your downside is
a. infinite.
b. defined.
c. the amount you paid for the stock.
d. all of the above.
e. more than one, but not all, of the above.
18._____When you are short a stock and have not borrowed to become short, the limit to your downside is
a. infinite.
b. defined.
c. the amount you paid for the stock.
d. all of the above.
e. more than one, but not all, of the above.
19.______The first two major pieces of federal securities regulation
a. were the Securities and Exchange Acts of ’33 and ’34.
b. were enacted in response to the Great Depression.
c. set the framework for modern securities regulation.
d. all of the above.
e. more than one, but not all of the above.
20._____All of you will be shorting stocks and trading on margin like scalded dogs.
a. Yeah you will!
b. I certainly hope not.
Q-10) Money market is a short-term source of borrowing, normally less than a year where as capital market is source of funds for long term, greater than a year, so the cutoff between the money market and capital market is 1 year.
The correct answer is d. One year
Q-11) Here Taylor buys the shares when the company went for IPO. IPO stand for initial public offering; this is the transaction between the company and the investor and this is an example of primary market transaction. So, the correct answer is
d. Primary market transaction.
Q-12) Once the share has been issued by the company and it is being bought and sold in the market, this transaction is occurring between investors and is an example of secondary market transaction, here the company is not involved with the investors.
So, the correct answer is
C. Secondary market transaction
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