Question 1

If a subscriber wants to buy a stock through an ECN with no sell order, the order will be executed and then matched after a sell order arrives.

Accepted Answer

A) True 
 B)False

Question 2

The Securities Act of 1933 did not

Accepted Answer

A)   require that all securities sold in more than one state be registered with the SEC.
B)   hold corporate officers liable for losses for those who were misled by false information in the prospectus.
C)   set guidelines for insiders who trade in the securities of their own firm.
D)   require a prospectus for all new issues of securities, which contains all information appearing in the registration statement.E) A) and D)
F) A) and C)

Question 3

The major supplier of funds for investment in the whole economy is

Accepted Answer

A)   businesses.
B)   households.
C)   government.
D)   financial institutions.E) C) and D)
F) A) and B)

Question 4

Which of the following is not a money market instrument?

Accepted Answer

A)   Treasury bills
B)   Commercial paper
C)   Negotiable certificates of deposit
D)   Treasury bondsE) B) and D)
F) C) and D)

Question 5

The 1994 North American Free Trade Agreement was established between the U.S., Canada, and Mexico which helped

Accepted Answer

A)   reduce trade barriers.
B)   allow trade to happen between these countries.
C)   lower the amount of illegal trading.
D)   all of the answers are correct.E) A) and D)
F) B) and C)

Question 6

Brokers actually own the securities they buy and sell on the floor of the exchange.

Accepted Answer

A) True 
 B)False

Question 7

Regional exchanges are primarily engaged in dual trading activities, although some local stocks are listed on regional exchanges only.

Accepted Answer

A) True 
 B)False

Question 8

The efficient market hypothesis deals primarily with

Accepted Answer

A)   random speculation in securities.
B)   the degree to which prices adjust to new information.
C)   the degrees to which price movements are the result of past trends.
D)   how an investor can significantly outperform the market in general.E) C) and D)
F) All of the above

Question 9

Capital markets consist of securities having maturities greater than one year.

Accepted Answer

A) True 
 B)False

Question 10

As interest rates begin to rise, this provides motivation for companies to issue long-term debt.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following was NOT a major supplier of funds to credit markets in 2008?

Accepted Answer

A)   Households
B)   Government sponsored agencies
C)   Mutual funds and ETFs
D)   All of the options were major suppliers of fundsE) A) and B)
F) A) and C)

Question 12

The NASDAQ market is the primary market for international securities.

Accepted Answer

A) True 
 B)False

Question 13

In the last decade, the Chinese have invested in U.S. securities and real assets.

Accepted Answer

A) True 
 B)False

Question 14

The European Central Bank that was created with the European Monetary Union has no control over monetary policy but is responsible for clearing transactions between the countries.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not an example of indirect investment by a household?

Accepted Answer

A)   Investment in a mutual fund's shares
B)   Investment in an original offering of corporate securities
C)   Investment in life insurance
D)   A savings deposit in a commercial bankE) A) and C)
F) C) and D)

Question 16

The emergence of trading via ECNs has

Accepted Answer

A)   provided a unique advantage not offered by the NYSE.
B)   lowered the cost of trading.
C)   made trading more difficult for insider traders.
D)   all of these options are true.E) A) and D)
F) A) and C)

Question 17

Financial intermediaries help eliminate inefficiencies such as indirect investment by households.

Accepted Answer

A) True 
 B)False

Question 18

The Federal National Mortgage Association buys mortgage loans from local lenders, bundles them together, and resells them as securities.

Accepted Answer

A) True 
 B)False

Question 19

Of the following efficient market hypotheses, researchers have stated that the ________ market is not efficient.

Accepted Answer

A)   weak
B)   semi-strong
C)   strong
D)   weak and semi-strongE) A) and D)
F) B) and D)

Question 20

Federal government agency issues, though backed directly by the U.S. Treasury, are deemed substantially more risky than regular government issues.

Accepted Answer

A) True 
 B)False

Exam 14: Capital Markets

If a subscriber wants to buy a stock through an ECN with no sell order, the order will be executed and then matched after a sell order arrives.

Correct AnswerverifiedShow Answer

Regional exchanges are primarily engaged in dual trading activities, although some local stocks are listed on regional exchanges only.

Correct AnswerverifiedShow Answer

Of the following efficient market hypotheses, researchers have stated that the ________ market is not efficient.

Correct AnswerverifiedShow Answer

Federal government agency issues, though backed directly by the U.S. Treasury, are deemed substantially more risky than regular government issues.

Correct AnswerverifiedShow Answer

The major supplier of funds for investment in the whole economy is

Correct AnswerverifiedShow Answer

Which of the following was NOT a major supplier of funds to credit markets in 2008?

Correct AnswerverifiedShow Answer

The efficient market hypothesis deals primarily with

Correct AnswerverifiedShow Answer

Which of the following is not an example of indirect investment by a household?

Correct AnswerverifiedShow Answer

The Federal National Mortgage Association buys mortgage loans from local lenders, bundles them together, and resells them as securities.

Correct AnswerverifiedShow Answer

As interest rates begin to rise, this provides motivation for companies to issue long-term debt.

Correct AnswerverifiedShow Answer

Capital markets consist of securities having maturities greater than one year.

Correct AnswerverifiedShow Answer

Financial intermediaries help eliminate inefficiencies such as indirect investment by households.

Correct AnswerverifiedShow Answer

In the last decade, the Chinese have invested in U.S. securities and real assets.

Correct AnswerverifiedShow Answer

Brokers actually own the securities they buy and sell on the floor of the exchange.

Correct AnswerverifiedShow Answer

The European Central Bank that was created with the European Monetary Union has no control over monetary policy but is responsible for clearing transactions between the countries.

Correct AnswerverifiedShow Answer

The NASDAQ market is the primary market for international securities.

Correct AnswerverifiedShow Answer

Which of the following is not a money market instrument?

Correct AnswerverifiedShow Answer

The Securities Act of 1933 did not

Correct AnswerverifiedShow Answer

The 1994 North American Free Trade Agreement was established between the U.S., Canada, and Mexico which helped

Correct AnswerverifiedShow Answer

The emergence of trading via ECNs has

Correct AnswerverifiedShow Answer

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