Chapter 2 The Financial Market Environment

16) The key securities traded in the capital markets are ________.

A) commercial papers and Treasury bills

B) Treasury bills and certificates of deposit

C) stocks and bonds

D) bills of exchange and commercial papers

17) Which of the following is true of international equity markets?

A) In the international equity market, corporations cannot raise capital through IPOs, instead they can raise capital by trading in the secondary market.

B) In the international equity market, corporations can easily manipulate the price of the shares since it is not regulated by any regulatory bodies.

C) In the international equity market, corporations can only sell blocks of shares to institutional investors from European Union.

D) In the international equity market, corporations can sell blocks of shares to investors in a number of different countries simultaneously.

18) Which of the following is true of a dealer market?

A) Buyers and sellers are never brought together directly.

B) Brokers execute the buy or sell orders in a dealer market.

C) It has centralized trading floors.

D) It is a part of the broker market.

19) Which of the following is true of a securities exchange?

A) It serves as an intermediary by channeling the savings of individuals, businesses, and governments into loans or investments.

B) It borrows funds directly from the financial institutions.

C) It is an association of banks who meet to buy and sell stocks and bonds.

D) It provides a marketplace in which firms can raise funds through the sale of new securities and purchasers can resell securities.

20) A market that establishes correct prices for the securities that firms sell and allocates funds to their most productive uses is called a(n) ________.

A) future market

B) forex market

C) efficient market

D) weak-form market

21) The ________ is created by a financial relationship between suppliers and demanders of short-term funds.

A) stock market

B) capital market

C) forex market

D) money market

22) By definition, the money market involves the buying and selling of ________.

A) stocks and bonds

B) short-term securities

C) all financial instruments except derivatives

D) secured premium notes

23) Most money market transactions are made in ________.

A) common stock

B) marketable securities

C) commodities market

D) preferred stock

24) The ________ is created by a number of institutions and arrangements that allow the suppliers and demanders of long-term funds to make transactions.

A) forex market

B) capital market

C) money market

D) commodities market