Question

5.A short sale involves: Select one: a. hedging against an increase in an asset price b....

5.A short sale involves:

Select one:
a. hedging against an increase in an asset price
b. speculating that an asset price will increase
c. hedging against a drop in an asset price
d. speculating that an asset price will decrease
e. selling an asset that the investor owns

13.Securities traded in the external market are distinguished by:

Select one:
a. Being accessible only to foreign investors.
b. Being offered simultaneously to investors in a number of countries.
c. Being issued outside the jurisdiction of any single country.
d. Being traded in Europe only.
e. b and c only.

40.Securities with a maturity of more than one year are traded in the:

Select one:
a. Bond market.
b. Money market.
c. Capital market.
d. Euromarket.
e. None of the above.

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Homework Answers

Answer #1

5d

Short selling means selling a borrowed asset. It is sold now in the anticipation that the prices will decline in future and the difference is the profit. Hence other options do not hold true.

13 e

External trade is trade of securities offered in multiple countries.Also they are outside the jurisdiction of any particular country. Hence a and d are invalid.

40: c

Capital market is the one used for trading longer term securities, those which have a maturity of longer than 1 year.Bond market is used for trading debt securities. Money market is used for trading short term securities. Euromarket is used for trading eurocurrencies.

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