The Stock Market

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Question 1

Free

Multiple Choice

High Color Detergent is issuing new shares of stock which will trade on NASDAQ.If Sue purchases 300 of these shares,the trade will occur in which one of the following markets?

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primary

secondary

third

fourth

over-the-counter

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Question 2

Free

Multiple Choice

Wilson just placed an order with his broker to purchase 500 of the outstanding shares of GE.This purchase will occur in which one of the following markets?

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primary

secondary

third

fourth

fifth

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Question 3

Free

Multiple Choice

Hi-Tek Shoes is a private firm that has decided to issue shares of stock to the general public.This stock issue will be referred to as a(n):

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open-end sale

break-out issue

public service offering

initial public offering

initial trial issue

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Question 4

Free

Multiple Choice

A firm that specializes in arranging financing for companies is called a(n):

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floor broker

investment banking firm

investment dealer

private broker

marketing firm

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Question 5

Free

Multiple Choice

The process of purchasing newly issued shares from the issuer and reselling those shares to the general public is called:

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underwriting

capitalizing

securing

brokering

deploying

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Question 6

Multiple Choice

The financing provided for new ventures that are frequently high-risk investments is referred to as "venture _______ ".

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capital

leverage

risk funds

funding

investing

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Question 7

Multiple Choice

Marco Painting Supplies is a publicly-traded firm with 250,000 shares of stock outstanding.If the firm issues an additional 10,000 shares,those shares will be referred to as a(n):

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supplemental offering.

seasoned equity offering.

initial public offer.

market expansion offer.

after-market underwriting.

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Question 8

Multiple Choice

Under the provisions of a general cash offer,shares of stock are offered to:

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underwriters on a guaranteed sale basis only.

current shareholders prior to being offered to the general public.

institutional investors only.

the issuer's employees on a cash purchase basis only.

the general public on a "first-come" basis.

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Question 9

Multiple Choice

A public offering of securities which are offered first to current shareholders is called a(n):

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existing shareholder offer.

limited offer.

rights offer.

venture offer.

preference offer.

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Question 10

Multiple Choice

The difference between the price an underwriter pays an issuer and the underwriter's offering price is called the:

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spread.

margin.

offer differential.

firm commitment.

underwriting capital.

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Question 11

Multiple Choice

When a group of underwriters jointly work together to sell a new issue of securities,the underwriters form a(n):

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underwriting cartel.

market union.

venture capital association.

Dutch market.

syndicate.

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Question 12

Multiple Choice

When an underwriting syndicate purchases an entire issue of new securities and accepts the risk of unsold shares,the underwriting is known as a _____ underwriting.

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Dutch auction

full-fledge

firm commitment

best efforts

guaranteed sale

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Question 13

Multiple Choice

When the issuer assumes the risk for any shares the underwriters cannot sell,the underwriting is known as a _____ underwriting.

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Dutch auction

partial

firm commitment

best efforts

pro-rata

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Question 14

Multiple Choice

When the price of newly issued shares is determined by competitive bidding the underwriting is known as a _____ underwriting.

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Dutch auction

market-priced

seasoned

best efforts

rights

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Question 15

Multiple Choice

Which one of the following is the federal agency which regulates the financial markets in the U.S.?

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Treasury Department

National Association of Securities Dealers

Over the Counter Commission

Federal Reserve

Securities and Exchange Commission

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Question 16

Multiple Choice

The document that must be prepared in order to receive approval for a stock offering is called a:

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tombstone.

prospectus.

offering agreement.

regulatory report.

offering paper.

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Question 17

Multiple Choice

A preliminary document provided to investors who are interested in a stock offering is called a(n):

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prospectus.

inquiry form.

draft offer.

green shoe.

red herring.

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Question 18

Multiple Choice

A securities dealer is a(n):

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intermediary who arranges trades between a buyer and a seller.

trader who buys and sells from his or her inventory.

firm which charges a commission for arranging a transaction.

person who buys securities for his or her own account on an exchange floor.

trader who transacts business on behalf of a securities issuer.

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Question 19

Multiple Choice

Which one of the following best describes a broker?

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intermediary who arranges trades between a buyer and a seller

trader who buys and sells from his or her inventory

firm which charges a commission for arranging a transaction

person who buys securities for his or her own account on an exchange floor

trader who transacts business on behalf of a securities issuer

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Question 20

Multiple Choice

Which one of the following prices will an individual investor receive if he or she sells shares of Microsoft?

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bid

ask

issue

offer

Dutch

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