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Question 1 of 10
1. Question
When underwriters make proposals to purchase a new issue of securities, with the securities going to the underwriter (or the underwriting syndicate) offering the lowest bid then which of the following sales occur:
I. Negotiated sales
II. Primary financing
III. Competitive sales
IV. Public offeringsCorrect
Competitive sales occur when underwriters make proposals to purchase a new issue of securities, with the securities going to the underwriter (or the underwriting syndicate) offering the lowest bid. This can also be called a public sale or a competitive bid.
Incorrect
Competitive sales occur when underwriters make proposals to purchase a new issue of securities, with the securities going to the underwriter (or the underwriting syndicate) offering the lowest bid. This can also be called a public sale or a competitive bid.
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Question 2 of 10
2. Question
Which of the following statement(s) is true related to Public offerings?
I. when an entity sells shares to a small number of specific investors
II. When an entity sells shares to the public for the purpose of raising funds
III. When underwriters make proposals to purchase a new issue of securities
IV. Used for debt securities, issuing bonds at a lower rateCorrect
Public offerings occur when an entity sells shares to the public for the purpose of raising funds.
Incorrect
Public offerings occur when an entity sells shares to the public for the purpose of raising funds.
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Question 3 of 10
3. Question
When an entity sells share to a small number of specific investors, again for the purpose of raising funds is known as:
I. Public offerings
II. Advance refunding
III. Official statements
IV. Negotiated salesCorrect
Private placements occur when an entity sells share to a small number of specific investors, again for the purpose of raising funds. Investors in private placements are usually larger ones, such as banks and mutual funds.
Incorrect
Private placements occur when an entity sells share to a small number of specific investors, again for the purpose of raising funds. Investors in private placements are usually larger ones, such as banks and mutual funds.
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Question 4 of 10
4. Question
Which of the following is (are) included in Notices of sale?
I. Amount and kind of bonds
II. The purpose for selling the bonds
III. Location and time for bids to be delivered
IV. Used for debt securitiesCorrect
Notices of sale are announcements made by municipal entities to declare that the entity is now accepting bids from underwriters (or underwriting syndicates) to purchase the issue of a new bond.
(i) Amount and kind of bonds (II) Purpose for selling the bonds (iii) Location and time for bids to be deliveredIncorrect
Notices of sale are announcements made by municipal entities to declare that the entity is now accepting bids from underwriters (or underwriting syndicates) to purchase the issue of a new bond.
(i) Amount and kind of bonds (II) Purpose for selling the bonds (iii) Location and time for bids to be delivered -
Question 5 of 10
5. Question
A person or institution which acts as a middleman between the buyer of a security and the seller of a security is known as:
I. Broker
II. Dealer
III. Priority
IV. ParityCorrect
A broker is a person or institution which acts as a middleman between the buyer of a security and the seller of a security. The broker makes his profit by charging a sales charge, or commission, for arranging the transaction.
Incorrect
A broker is a person or institution which acts as a middleman between the buyer of a security and the seller of a security. The broker makes his profit by charging a sales charge, or commission, for arranging the transaction.
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Question 6 of 10
6. Question
A person or institution which sells its own inventory to buyers is known as:
I. Priority
II. Parity
III. Broker
IV. DealerCorrect
A dealer is a person or institution which sells its own inventory to buyers (like a used-car dealer). dealer charges a markdown when he purchases inventory, lowering the price he pays for the inventory; and he charges a markup when he sells it, increasing the price the customer pays for it.
Incorrect
A dealer is a person or institution which sells its own inventory to buyers (like a used-car dealer). dealer charges a markdown when he purchases inventory, lowering the price he pays for the inventory; and he charges a markup when he sells it, increasing the price the customer pays for it.
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Question 7 of 10
7. Question
Which of the following is known as the second market?
I. Pink sheets
II. Over-the-counter (OTC) securities
III. Bulletin board stocks
IV. Auction marketsCorrect
The over-the-counter (OTC) market is also known as the second market (not to be confused with the secondary market, which encompasses all the various ways of trading stock besides new issues). It consists of a nationwide network of brokers and dealers connected by phone and computer who trade non-listed stocks from their offices.
Incorrect
The over-the-counter (OTC) market is also known as the second market (not to be confused with the secondary market, which encompasses all the various ways of trading stock besides new issues). It consists of a nationwide network of brokers and dealers connected by phone and computer who trade non-listed stocks from their offices.
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Question 8 of 10
8. Question
Which of the following statement is false for over-the-counter bulletin board?
I. Displays quotes
II. Displays recent sale prices
III. Provides information for the market makers
IV. Nationwide network of brokers and dealers connected by phoneCorrect
The over-the-counter bulletin board (OTCBB) is a regulated electronic medium for trading over-the-counter (OTC) securities, displaying quotes, recent sale prices, and volume information.
Incorrect
The over-the-counter bulletin board (OTCBB) is a regulated electronic medium for trading over-the-counter (OTC) securities, displaying quotes, recent sale prices, and volume information.
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Question 9 of 10
9. Question
Which of the following is an electronic market that handles more volume than the NYSE?
I. NASDAQ
II. New York Stock Exchange
III. Dow Jones Industrial Average
IV. Electronic communication networksCorrect
The National Association of Securities Dealers Automated Quotations (NASDAQ) is an electronic market that handles more volume than the NYSE although the market value of the NASDAQ is lower than that of the NYSE.
Incorrect
The National Association of Securities Dealers Automated Quotations (NASDAQ) is an electronic market that handles more volume than the NYSE although the market value of the NASDAQ is lower than that of the NYSE.
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Question 10 of 10
10. Question
A System which aims to facilitate more direct trading between traders and brokerage firms is known as:
I. Secondary market
II. Government agency bonds
III. Electronic communication networks
IV. New York Stock ExchangeCorrect
Electronic communication networks (ECNs) are systems which aim to facilitate more direct trading between traders and brokerage firms. ECNs allow orders to be executed without a third party, especially orders executed by a market maker.
Incorrect
Electronic communication networks (ECNs) are systems which aim to facilitate more direct trading between traders and brokerage firms. ECNs allow orders to be executed without a third party, especially orders executed by a market maker.