ESSENTIALS OF INVESTMENTS (GLOBAL
EDITION) CHAPTER 3 QUESTIONS WITH
CORRECT ANSWERS 2026-2027
primary market - correct answer-market for new issues of securities
secondary market - correct answer-market for already excisting securities
private placement - correct answer-
primary offerings in which shares are sold directly to a small group of institutionals or wealthy investo
rs
initial public offering (IPO) - correct answer-first sale of stock by a private company
underwriters - correct answer-
underwriters purchase securities from the issuing company and resell them to the public
prospectus - correct answer-a description of the firm and the security it is issuing
dealer markets - correct answer-
markets in which traders specializing in particular assets buy and sell for their own accounts
auction market - correct answer-a market where all traders meet at one place to buy or sell an asset
bid price - correct answer-the price at which a dealer or other trader will sell a security
ask price - correct answer-the price at which a dealer or other trader will sell a security
bid-ask spread - correct answer-the difference between the bid and asked price
EDITION) CHAPTER 3 QUESTIONS WITH
CORRECT ANSWERS 2026-2027
primary market - correct answer-market for new issues of securities
secondary market - correct answer-market for already excisting securities
private placement - correct answer-
primary offerings in which shares are sold directly to a small group of institutionals or wealthy investo
rs
initial public offering (IPO) - correct answer-first sale of stock by a private company
underwriters - correct answer-
underwriters purchase securities from the issuing company and resell them to the public
prospectus - correct answer-a description of the firm and the security it is issuing
dealer markets - correct answer-
markets in which traders specializing in particular assets buy and sell for their own accounts
auction market - correct answer-a market where all traders meet at one place to buy or sell an asset
bid price - correct answer-the price at which a dealer or other trader will sell a security
ask price - correct answer-the price at which a dealer or other trader will sell a security
bid-ask spread - correct answer-the difference between the bid and asked price
