Question

Quick as possible pls if can't do two questions then I prefer to answer #2

1.)Which of the following statement is/are correct?

A.) Toby Inc raises capital when investor buy and sell its shares in the secondary market
B.)The corporation is the seller in the primary market
C.)NASDAQ is an example of auction market
D.) All the above

2.)Which of the following is/are correct
A.) EAR is always greater the norminal rate when interest rate is annually compounding
B.) EAR is always less than the norminal rate when interest rate is annually compouding
C.) EAR is always same as the nominal rate when interest rate is annually compounding
D.) All the above

Answer 1

1)

In Primary Market, Company is Issuing share for the first time, and raising money. In Secondary Market, Investors already holding shares, Buy and Sell the share from or to other investors. NASDAQ is a Stock Exchange NOT AN AUCTION MARKET.

Therefore, (B) Corporation is a Seller in Primary Market

2)

EAR is Effective Annual Interest Rate. EAR = [{1+(Nominal Rate/Number of times compounded in a year)}^Number of times compounded in a year]-1

Accordingly, if it is compounded Annually i.e. 1 times a year, EAR will be EQUAL TO Nominal Rate

Therefore, (C) SAME