Chapter 03 - How Securities Are Traded

1. The trading of stock that was previously issued takes place A. in the secondary market. B. in the primary market. C. usually with the assistance of an investment banker. D. A and B. E. B and C. 2. A purchase of a new issue of stock takes place A. in the secondary market. B. in the primary market. C. usually with the assistance of an investment banker. D. A and B. E. B and C. 3. Firms raise capital by issuing stock A. in the secondary market. B. in the primary market. C. to unwary investors. D. only on days when the market is up. E. C and D. 4. The following statements regarding the specialist are true: A. Specialists maintain a book listing outstanding unexecuted limit orders. B. Specialists earn income from commissions and spreads in stock prices. C. Specialists stand ready to trade at quoted bid and ask prices. D. Specialists cannot trade in their own accounts. E. A, B, and C are all true. 3-1 Chapter 03 - How Securities Are Traded 5. Investment bankers A. act as intermediaries between issuers of stocks and investors. B. act as advisors to companies in helping them analyze their financial needs and find buyers for newly issued securities. C. accept deposits from savers and lend them out to companies. D. A and B. E. A, B, and C.