1. A market is a means through which buyers and sellers are brought together to aid in the transfer of goods and/or services.
T
5. A market in which prices adjust rapidly to new information is considered to be internally efficient.
F
11. Only the stocks of large companies are traded in the primary market.
F
12. A good secondary market is important to the efficiency of the primary market.
T
33. Which of the following statements about a market is true?
a. It is not necessary for the market to have a physical location.
b. The market does not necessarily own the goods or services involved.
c. A market can deal in any variety of goods and servic
E
35. When a market is externally efficient, it means that
a. timely and accurate information is available.
b. the market is liquid.
c. transaction costs are low.
d. prices adjust rapidly to new information.
e. the number of buyers and sellers are the same.
D
49. All of the following are advantages of secondary markets EXCEPT that they
a. provide liquidity to individuals holding the securities.
b. support the primary market by reducing the required rate of return due to the lower liquidity risk for securities.
E
Heidi Talbott has a margin account with a balance of $50,000. The initial margin deposit is 50 percent, and RC Industries is currently selling at $50 per share.
58. Refer to Exhibit 3.2. How many shares of RC can Heidi buy?
a. 2,500
b. 2,000
c. 1,000
d. 5
B
Heidi Talbott has a margin account with a balance of $50,000. The initial margin deposit is 50 percent, and RC Industries is currently selling at $50 per share.
59. Refer to Exhibit 3.2. What is Heidi's profit if RC's price rises to $80?
a. $55,000
b. $50
C
Heidi Talbott has a margin account with a balance of $50,000. The initial margin deposit is 50 percent, and RC Industries is currently selling at $50 per share.
60. Refer to Exhibit 3.2. If the maintenance margin is 25 percent, to what price can RC Indust
D
25. The low correlations between the U.S. and Japan confirm the benefit of global diversification.
T
27. A benchmark measures the performance by portfolio managers.
T
28. For an indexed portfolio, the fund manager will typically attempt to replicate the composition of the particular index exactly.
T