Chapter 03 Securities Markets
p p p
p
MultiplepChoicepQuestions
p
1. Underwritingpisponepofpthepservicespprovidedpbyp_____.p
p
A.pthepSEC
B.pinvestmentpbankers
C.ppubliclyptradedpcompanies
D.pFDIC
p
2 Underpfirm-
. commitmentpunderwriting,pthep______passumespthepfullpriskpthatpthepsharespcannotpbepsoldptoptheppubli
cpatpthepstipulatedpofferingpprice.p
p
A.predpherring
B.pissuingpcompany
C.pinitialpstockholder
D.punderwriter
p
3. ExplicitpcostspofpanpIPOptendptopbeparoundp______pofpthepfundspraised.p
p
A.p1%
B.p7%
C.p15%
D.p25%
p
©p2013pbypMcGraw-
HillpEducation.ppThispispproprietarypmaterialpsolelypforpauthorizedpinstructorpuse.pNotpauthorizedpforpsaleporpdistrib
utionpinpanypmanner.ppThispdocumentpmaypnotpbepcopied,pscanned,pduplicated,pforwarded,pdistributed,porppostedpo
npapwebsite,pinpwholeporppart.
,4BarnegatpLightpsoldp200,000psharespinpanpinitialppublicpoffering.pThepunderwriter'spexplicitpfeespwerep$9
.0,000.pThepofferingppricepforpthepsharespwasp$35,pbutpimmediatelypuponpissue,pthepshareppricepjumpedp
top$43.pWhatpispthepbestpestimatepofptheptotalpcostptopBarnegatpLightpofpthepequitypissue?p
p
A.p$90,000
B.p$1,290,000
C.p$2,390,000
D.p$1,690,000
p
5. Apredpherringpbecomespapprospectuspwhenp____.p
p
A.ptheppreliminarypregistrationpstatementpispapprovedpbypthepSEC
B.pthepIPOpispcomplete
C.pthepofferingpispseasoned
D.ptheplockuppperiodpexpires
p
6. Privatepplacementspcanpbepadvantageous,pcomparedptoppublicpissue,pbecause:
I.pPrivatepplacementsparepcheaperptopmarketpthanppublicpissues.
II.pPrivatepplacementspmaypstillpbepsoldptopthepgeneralppublicpunderpSECpRulep144A.
III.pPrivatelypplacedpsecuritiesptradeponpsecondarypmarkets.p
p
A.pIponly
B.pIpandpIIIponly
C.pIIpandpIIIponly
D.pI,pII,pandpIII
p
©p2013pbypMcGraw-
HillpEducation.ppThispispproprietarypmaterialpsolelypforpauthorizedpinstructorpuse.pNotpauthorizedpforpsaleporpdistrib
utionpinpanypmanner.ppThispdocumentpmaypnotpbepcopied,pscanned,pduplicated,pforwarded,pdistributed,porppostedpo
npapwebsite,pinpwholeporppart.
,7. Aplevelp_____psubscriberptopthepNASDAQpsystempmaypenterpbidpandpaskpprices.p
p
A.p1
B.p2
C.p3
D.p4
p
8. WhichponepofpthepfollowingpstatementspaboutpIPOspispnotptrue?p
p
A.pIPOspgenerallypunderperformpinpthepshortprun.
B.pIPOspoftenpprovidepverypgoodpinitialpreturnsptopinvestors.
C.pIPOspgenerallypprovidepsuperiorplong-termpperformancepaspcomparedptopotherpstocks.
D.pSharespinpIPOsparepoftenpprimarilypallocatedptopinstitutionalpinvestors.
p
9Thepmarginprequirementponpapstockppurchasepisp25%.pYoupfullypusepthepmarginpallowedptoppurchasep1
. 00psharespofpMSFTpatp$25.pIfptheppricepdropsptop$22,pwhatpispyourppercentageploss?p
p
A.p9%
B.p15%
C.p48%
D.p57%
p
10. ThepNYSEpacquiredpthepECNp_______,pandpNASDAQprecentlypacquiredpthepECNp________.p
p
A.pArchipelago;pInstinet
B.pInstinet;pArchipelago
C.pIsland;pInstinet
D.pLSE;pEuronext
p
©p2013pbypMcGraw-
HillpEducation.ppThispispproprietarypmaterialpsolelypforpauthorizedpinstructorpuse.pNotpauthorizedpforpsaleporpdistrib
utionpinpanypmanner.ppThispdocumentpmaypnotpbepcopied,pscanned,pduplicated,pforwarded,pdistributed,porppostedpo
npapwebsite,pinpwholeporppart.
, 11 Rankpthepfollowingptypespofpmarketspfrompleastpintegratedpandporganizedptopmostpintegratedpandporg
. anized:
I.pBrokeredpmarkets
II.pContinuouspauctionpmarkets
III.pDealerpmarkets
IV.pDirectpsearchpmarketsp
p
A.pIV,pII,pI,pIII
B.pI,pIII,pIV,pII
C.pII,pIII,pIV,pI
D.pIV,pI,pIII,pII
p
1 Aspapresultpofpflashpcrashes,pthepSECpisptryingpcircuitpbreakerspthatpwillphaltptradingpforp5pminutespifplar
2. gepstocks'ppricespchangepbypmorepthanp_____pinpap5-minutepperiod.p
p
A.p10%
B.p20%
C.p30%
D.p40%
p
13. Whichponepofpthepfollowingpispnotpanpexamplepofpapbrokeredpmarket?p
p
A.pResidentialprealpestatepmarket
B.pMarketpforplargepblockpsecurityptransactions
C.pPrimarypmarketpforpsecurities
D.pNASDAQ
p
©p2013pbypMcGraw-
HillpEducation.ppThispispproprietarypmaterialpsolelypforpauthorizedpinstructorpuse.pNotpauthorizedpforpsaleporpdistrib
utionpinpanypmanner.ppThispdocumentpmaypnotpbepcopied,pscanned,pduplicated,pforwarded,pdistributed,porppostedpo
npapwebsite,pinpwholeporppart.
p p p
p
MultiplepChoicepQuestions
p
1. Underwritingpisponepofpthepservicespprovidedpbyp_____.p
p
A.pthepSEC
B.pinvestmentpbankers
C.ppubliclyptradedpcompanies
D.pFDIC
p
2 Underpfirm-
. commitmentpunderwriting,pthep______passumespthepfullpriskpthatpthepsharespcannotpbepsoldptoptheppubli
cpatpthepstipulatedpofferingpprice.p
p
A.predpherring
B.pissuingpcompany
C.pinitialpstockholder
D.punderwriter
p
3. ExplicitpcostspofpanpIPOptendptopbeparoundp______pofpthepfundspraised.p
p
A.p1%
B.p7%
C.p15%
D.p25%
p
©p2013pbypMcGraw-
HillpEducation.ppThispispproprietarypmaterialpsolelypforpauthorizedpinstructorpuse.pNotpauthorizedpforpsaleporpdistrib
utionpinpanypmanner.ppThispdocumentpmaypnotpbepcopied,pscanned,pduplicated,pforwarded,pdistributed,porppostedpo
npapwebsite,pinpwholeporppart.
,4BarnegatpLightpsoldp200,000psharespinpanpinitialppublicpoffering.pThepunderwriter'spexplicitpfeespwerep$9
.0,000.pThepofferingppricepforpthepsharespwasp$35,pbutpimmediatelypuponpissue,pthepshareppricepjumpedp
top$43.pWhatpispthepbestpestimatepofptheptotalpcostptopBarnegatpLightpofpthepequitypissue?p
p
A.p$90,000
B.p$1,290,000
C.p$2,390,000
D.p$1,690,000
p
5. Apredpherringpbecomespapprospectuspwhenp____.p
p
A.ptheppreliminarypregistrationpstatementpispapprovedpbypthepSEC
B.pthepIPOpispcomplete
C.pthepofferingpispseasoned
D.ptheplockuppperiodpexpires
p
6. Privatepplacementspcanpbepadvantageous,pcomparedptoppublicpissue,pbecause:
I.pPrivatepplacementsparepcheaperptopmarketpthanppublicpissues.
II.pPrivatepplacementspmaypstillpbepsoldptopthepgeneralppublicpunderpSECpRulep144A.
III.pPrivatelypplacedpsecuritiesptradeponpsecondarypmarkets.p
p
A.pIponly
B.pIpandpIIIponly
C.pIIpandpIIIponly
D.pI,pII,pandpIII
p
©p2013pbypMcGraw-
HillpEducation.ppThispispproprietarypmaterialpsolelypforpauthorizedpinstructorpuse.pNotpauthorizedpforpsaleporpdistrib
utionpinpanypmanner.ppThispdocumentpmaypnotpbepcopied,pscanned,pduplicated,pforwarded,pdistributed,porppostedpo
npapwebsite,pinpwholeporppart.
,7. Aplevelp_____psubscriberptopthepNASDAQpsystempmaypenterpbidpandpaskpprices.p
p
A.p1
B.p2
C.p3
D.p4
p
8. WhichponepofpthepfollowingpstatementspaboutpIPOspispnotptrue?p
p
A.pIPOspgenerallypunderperformpinpthepshortprun.
B.pIPOspoftenpprovidepverypgoodpinitialpreturnsptopinvestors.
C.pIPOspgenerallypprovidepsuperiorplong-termpperformancepaspcomparedptopotherpstocks.
D.pSharespinpIPOsparepoftenpprimarilypallocatedptopinstitutionalpinvestors.
p
9Thepmarginprequirementponpapstockppurchasepisp25%.pYoupfullypusepthepmarginpallowedptoppurchasep1
. 00psharespofpMSFTpatp$25.pIfptheppricepdropsptop$22,pwhatpispyourppercentageploss?p
p
A.p9%
B.p15%
C.p48%
D.p57%
p
10. ThepNYSEpacquiredpthepECNp_______,pandpNASDAQprecentlypacquiredpthepECNp________.p
p
A.pArchipelago;pInstinet
B.pInstinet;pArchipelago
C.pIsland;pInstinet
D.pLSE;pEuronext
p
©p2013pbypMcGraw-
HillpEducation.ppThispispproprietarypmaterialpsolelypforpauthorizedpinstructorpuse.pNotpauthorizedpforpsaleporpdistrib
utionpinpanypmanner.ppThispdocumentpmaypnotpbepcopied,pscanned,pduplicated,pforwarded,pdistributed,porppostedpo
npapwebsite,pinpwholeporppart.
, 11 Rankpthepfollowingptypespofpmarketspfrompleastpintegratedpandporganizedptopmostpintegratedpandporg
. anized:
I.pBrokeredpmarkets
II.pContinuouspauctionpmarkets
III.pDealerpmarkets
IV.pDirectpsearchpmarketsp
p
A.pIV,pII,pI,pIII
B.pI,pIII,pIV,pII
C.pII,pIII,pIV,pI
D.pIV,pI,pIII,pII
p
1 Aspapresultpofpflashpcrashes,pthepSECpisptryingpcircuitpbreakerspthatpwillphaltptradingpforp5pminutespifplar
2. gepstocks'ppricespchangepbypmorepthanp_____pinpap5-minutepperiod.p
p
A.p10%
B.p20%
C.p30%
D.p40%
p
13. Whichponepofpthepfollowingpispnotpanpexamplepofpapbrokeredpmarket?p
p
A.pResidentialprealpestatepmarket
B.pMarketpforplargepblockpsecurityptransactions
C.pPrimarypmarketpforpsecurities
D.pNASDAQ
p
©p2013pbypMcGraw-
HillpEducation.ppThispispproprietarypmaterialpsolelypforpauthorizedpinstructorpuse.pNotpauthorizedpforpsaleporpdistrib
utionpinpanypmanner.ppThispdocumentpmaypnotpbepcopied,pscanned,pduplicated,pforwarded,pdistributed,porppostedpo
npapwebsite,pinpwholeporppart.
