Question

This is True or False, so a brief explanation would be appreciated!

-Firms sell their stocks in primary market lower than its real value -Brokers can sell from their own inventory as well as matching others potential sellers with buyers.
-Price of a bond significantly depends on Par value of a bond.

Answer 1

Firms sell their stocks in primary market lower than its real value False. Because the market price of stock is driven by demand and cannot be fixed by the firm. It could be higher or lower based on the market expectations.

Brokers can sell from their own inventory as well as matching others potential sellers with buyers. False. Brokers do not keep inventory of stock. They just facilitate sales of share from buyer to seller without possession of share.

Price of a bond significantly depends on Par value of a bond. True. Because PAR value is the amount received at the end of the maturity . Hence value of fixed period bond is more than perpetuity because of the par value received at end of maturity.

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