Saunders Chapter One
1. Financial Markets <Ans> Structures/arenas through which funds flow
2. 1. Primary versus secondary markets
2. Money versus capital markets <Ans> Two(2) major dimensions where
financial mar- kets can be distinguished
3. Primary Markets <Ans> Markets in which corporations raise funds through
new issues of securities
4. Stocks and Bonds <Ans> Samples of issues of financial instruments
through which corporations raise funds
5. Private Placement <Ans> Rather than a public offering, a primary market sale
can take the form of
6. Initial Public Offerings (IPOs) <Ans> The first public issue of financial
instruments by a firm
7. False. They also include the issue of additional equity or debt instruments of
an already publicly traded firm <Ans> Primary market securities only include
the issue of equity or debt instruments of newly traded firms. True or False?
8. Investors <Ans> Another name for initial suppliers of funds
9. "Spinning" <Ans> One of the most harmful practices that have given rise to
public concerns in which certain underwriters allocate "hot" IPO issues to directors
and/or executives of potential investment banking clients in exchanged for
investment banking business
10. True <Ans> Secondary markets provide a centralized marketplace where
economic agents know they can transact quickly and efficiently. True or False?
11. Securities Broker <Ans> When an economic agent buys a financial
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, instrument in a secondary market, funds are exchanged, usually with the help of
a
12. False <Ans> The original issuer of the financial instrument is still
involved in the transactions of the secondary market. True or False?
13. 1.New York Stock Exchange (NYSE)
2. American Stock Exchange (AMEX)
3. National Association of Securities Dealers Automated Quotation (NASDAQ)-
<Ans> Three well-known examples of secondary markets for trading stocks
14. Derivative Security <Ans> A financial security whose payoffs are linked
to other, previously issued (or underlying) primary securities
15. Secondary Market <Ans> This market offers benefits to both investors and
issuing corporations.
16. True <Ans> Secondary markets offer buyers and sellers liquidity. True or False
17. Liquidity <Ans> The ability to turn an asset into cash quickly -- as well as
information about the price or the value of their investments
18. Money Markets <Ans> Markets that trade debt securities or instruments with
maturi- ties of one year or less
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1. Financial Markets <Ans> Structures/arenas through which funds flow
2. 1. Primary versus secondary markets
2. Money versus capital markets <Ans> Two(2) major dimensions where
financial mar- kets can be distinguished
3. Primary Markets <Ans> Markets in which corporations raise funds through
new issues of securities
4. Stocks and Bonds <Ans> Samples of issues of financial instruments
through which corporations raise funds
5. Private Placement <Ans> Rather than a public offering, a primary market sale
can take the form of
6. Initial Public Offerings (IPOs) <Ans> The first public issue of financial
instruments by a firm
7. False. They also include the issue of additional equity or debt instruments of
an already publicly traded firm <Ans> Primary market securities only include
the issue of equity or debt instruments of newly traded firms. True or False?
8. Investors <Ans> Another name for initial suppliers of funds
9. "Spinning" <Ans> One of the most harmful practices that have given rise to
public concerns in which certain underwriters allocate "hot" IPO issues to directors
and/or executives of potential investment banking clients in exchanged for
investment banking business
10. True <Ans> Secondary markets provide a centralized marketplace where
economic agents know they can transact quickly and efficiently. True or False?
11. Securities Broker <Ans> When an economic agent buys a financial
1/
15
, instrument in a secondary market, funds are exchanged, usually with the help of
a
12. False <Ans> The original issuer of the financial instrument is still
involved in the transactions of the secondary market. True or False?
13. 1.New York Stock Exchange (NYSE)
2. American Stock Exchange (AMEX)
3. National Association of Securities Dealers Automated Quotation (NASDAQ)-
<Ans> Three well-known examples of secondary markets for trading stocks
14. Derivative Security <Ans> A financial security whose payoffs are linked
to other, previously issued (or underlying) primary securities
15. Secondary Market <Ans> This market offers benefits to both investors and
issuing corporations.
16. True <Ans> Secondary markets offer buyers and sellers liquidity. True or False
17. Liquidity <Ans> The ability to turn an asset into cash quickly -- as well as
information about the price or the value of their investments
18. Money Markets <Ans> Markets that trade debt securities or instruments with
maturi- ties of one year or less
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