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Chap007.docx
Chap007.docx
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Chap007.docx-CHAPTER 7 Equity Markets and Stock
Chap007.docx-CHAPTER 7 Equity Markets and Stock
Chap007.docx-CHAPTER 7 Equity Marke...
Chap007.docx-CHAPTER 7 Equity Markets and Stock
Page 3
e
12. Stock which generally pays a fixed dividend and receives priority in the payment of
dividends and the distribution of corporate assets is called_______stock.
a.
convertible
b.
common
c.
priority
d.
senior
e.
preferred
PRIMARY MARKET
a
13. The market in which new securities are originally sold to investors is called the
___
market.
a.
primary
b.
open
c.
secondary
d.
free
e.
initial public
SECONDARY MARKET
c
14. The market where one shareholder sells shares to another shareholder is called the
__ market.
a.
primary
b.
open
c.
secondary
d.
free
e.
dealer
DEALER
b
15. A dealer is an agent who:
a.
transacts buy and sell orders on a commission basis.
b.
buys and sells securities from inventory.
c.
arranges transactions on a fee basis.
d.
trades solely on behalf of a floor broker.
e.
buys and sells securities but never takes title to the securities.
BROKER
c
16. An agent who arranges security transactions among investors is a called a:
a.
dealer.
b.
specialist.
c.
broker.
d.
member.
e.
floor trader.
MEMBER
d
17. An owner of a seat on the NYSE is called a:
a.
dealer.
b.
broker.
c.
specialist.
d.
member.
e.
runner.
Page 4
COMMISSION BROKERS
d
18. The persons who execute customer buy and sell orders on the floor of the NYSE are
called:
a.
floor traders.
b.
specialists.
c.
runners.
d.
commission brokers.
e.
market makers.
SPECIALIST
e
19. The market maker who deals in a small number of securities on the exchange floor is
called the:
a.
floor broker.
b.
floor dealer.
c.
fee broker.
d.
fee dealer.
e.
specialist.
FLOOR BROKER
c
20. Members who execute orders on a fee basis for commission brokers are referred to
as:
a.
fee tenders.
b.
dealers.
c.
floor brokers.
d.
fee specialists.
e.
runners.
SUPERDOT SYSTEM
b
21. The electronic system that transmits orders directly to a specialist on the floor of the
NYSE is called the:
a.
NASDAQ.
b.
SuperDOT system.
c.
TICKER.
d.
ECN.
e.
Island.
FLOOR TRADERS
c
22. An independent individual who trades for his or her own account by buying and
selling
on the floor of the NYSE is referred to as a(n):
a.
specialist.
b.
independent broker.
c.
floor trader.
d.
stand-alone agent.
e.
dealer.
Page 5
ORDER FLOW
a
23. Order flow can be defined as the:
a.
stream of customer orders to buy and sell securities.
b.
amount of commissions earned by a broker during trading hours.
c.
change in the spread for a particular security as demand and supply vary.
d.
opening and closing security prices each trading day.
e.
type of order, such as a market order or a limit order.
SPECIALIST’S POST
c
24. The location on the floor of an exchange where an individual security is traded is
called the:
a.
box office.
b.
figure 8.
c.
specialist’s post.
d.
trading booth.
e.
SuperDot.
INSIDE QUOTES
e
25. Inside quotes are defined as the:
a.
security price charged to a firm’s most active traders.
b.
security price charged to a firm’s own employees.
c.
last price of the day which occurs as the bell is ringing .
d.
highest ask quotes and the lowest bid quotes for a security.
e.
lowest ask quotes and the highest bid quotes for a security.
ELECTRONIC COMMUNICATIONS NETWORKS (ECNs)
c
26. A Web site that enables an investor to trade directly with another investor is called
a(n):
a.
SuperDOT.
b.
POST.
c.
ECN.
d.
NASDAQ.
e.
NET.
II.
CONCEPTS
STOCK PRICE
c
27. The current price of a stock is based:
a.
primarily on the future value of the cash flows derived from the stock.
b.
solely on the anticipated future dividends.
c.
on the present value of all the future cash flows from that stock.
d.
strictly on the anticipated future stock price.
e.
on the present value of the dividends and the repayment of the principal.
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