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Fundamentals of Investing, 13e (Smart)
Chapter 2 Securities Markets and Transactions
2.1 Learning Goal 1
1) Stocks, bonds and mutual fund shares are bought and sold in the capital market.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
2) Capital markets deal exclusively in stock. Money markets deal exclusively in debt
instruments.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
3) Primary markets deal in the stocks of larger, well-known companies; secondary markets deal
in the stocks of smaller, less well-known companies.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
4) Short-term securities are bought and sold in the A) capital market.
B) primary market.
C) money market.
D) stock market.
Answer: C
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
1
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,DOWNLOAD THE Test Bank for Fundamentals of Investing 13th Edition Smar
Question Status: Previous Edition
Learning Goal: Learning Goal 1
5) The governmental agency that oversees the capital markets is the A)
Federal Trade Commission.
B) Federal Reserve.
C) Securities and Exchange Commission.
D) Fair Trade and Banking Agency.
Answer: C
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
6) Stocks purchased in the secondary market are purchased A)
directly from the issuing corporation.
B) from other investors.
C) from small, little-known brokerages.
D) indirectly through financial institutions.
Answer: B
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
7) Stocks and bonds are traded in A)
securities and exchange commissions.
B) money markets.
C) federal trade commissions.
D) capital markets.
Answer: D
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
8) The primary market tends to be more active when
A) the economy is slowing and stock prices are falling.
2
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,DOWNLOAD THE Test Bank for Fundamentals of Investing 13th Edition Smar
B) the economy is expanding and stock prices are rising.
C) interest rates are rising.
D) early in the calendar year.
Answer: B
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: New Question
Learning Goal: Learning Goal 1
2.2 Learning Goal 2
1) Underwriters are responsible for promoting and facilitating the sale of securities.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
2) The preliminary version of a prospectus is called a red herring.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
3) The purpose of the "quiet period" a company must observe from the time it files a registration
statement with the SEC until after an IPO is complete is to assure that all investors receive the
same information.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: New Question
Learning Goal: Learning Goal 2
4) IPOs are typically underpriced so that the price rises during the first few days of trading.
Answer: TRUE
3
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, DOWNLOAD THE Test Bank for Fundamentals of Investing 13th Edition Smar
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
5) IPOs are relatively safe investments.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
6) The price of stock sold in an IPO is set by bids submitted in the month before trading begins.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: New Question
Learning Goal: Learning Goal 2
7) Which one of the following statements concerning the primary market is correct? A) A
transaction in the primary market is between two private stockholders.
B) The first public sale of a company's stock in the primary market is called a seasoned new
issue.
C) The first public sale of a company's stock is called an IPO.
D) A rights offering is a direct sale of stock to an institution that participates in the primary
market. Answer: C
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
8) A rights offering is the
A) initial offering of securities to the public.
B) offering of new securities to current shareholders on a pro-rata basis.
C) sale of newly issued shares of stock to the general public.
D) sale of securities directly to a select group of investors.
4
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mynursytest.store
Fundamentals of Investing, 13e (Smart)
Chapter 2 Securities Markets and Transactions
2.1 Learning Goal 1
1) Stocks, bonds and mutual fund shares are bought and sold in the capital market.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
2) Capital markets deal exclusively in stock. Money markets deal exclusively in debt
instruments.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
3) Primary markets deal in the stocks of larger, well-known companies; secondary markets deal
in the stocks of smaller, less well-known companies.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
4) Short-term securities are bought and sold in the A) capital market.
B) primary market.
C) money market.
D) stock market.
Answer: C
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
1
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mynursytest.store
,DOWNLOAD THE Test Bank for Fundamentals of Investing 13th Edition Smar
Question Status: Previous Edition
Learning Goal: Learning Goal 1
5) The governmental agency that oversees the capital markets is the A)
Federal Trade Commission.
B) Federal Reserve.
C) Securities and Exchange Commission.
D) Fair Trade and Banking Agency.
Answer: C
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
6) Stocks purchased in the secondary market are purchased A)
directly from the issuing corporation.
B) from other investors.
C) from small, little-known brokerages.
D) indirectly through financial institutions.
Answer: B
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
7) Stocks and bonds are traded in A)
securities and exchange commissions.
B) money markets.
C) federal trade commissions.
D) capital markets.
Answer: D
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 1
8) The primary market tends to be more active when
A) the economy is slowing and stock prices are falling.
2
Copyright © 2017 Pearson Education, Inc.
mynursytest.store
,DOWNLOAD THE Test Bank for Fundamentals of Investing 13th Edition Smar
B) the economy is expanding and stock prices are rising.
C) interest rates are rising.
D) early in the calendar year.
Answer: B
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: New Question
Learning Goal: Learning Goal 1
2.2 Learning Goal 2
1) Underwriters are responsible for promoting and facilitating the sale of securities.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
2) The preliminary version of a prospectus is called a red herring.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
3) The purpose of the "quiet period" a company must observe from the time it files a registration
statement with the SEC until after an IPO is complete is to assure that all investors receive the
same information.
Answer: TRUE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: New Question
Learning Goal: Learning Goal 2
4) IPOs are typically underpriced so that the price rises during the first few days of trading.
Answer: TRUE
3
Copyright © 2017 Pearson Education, Inc.
mynursytest.store
, DOWNLOAD THE Test Bank for Fundamentals of Investing 13th Edition Smar
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
5) IPOs are relatively safe investments.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
6) The price of stock sold in an IPO is set by bids submitted in the month before trading begins.
Answer: FALSE
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: New Question
Learning Goal: Learning Goal 2
7) Which one of the following statements concerning the primary market is correct? A) A
transaction in the primary market is between two private stockholders.
B) The first public sale of a company's stock in the primary market is called a seasoned new
issue.
C) The first public sale of a company's stock is called an IPO.
D) A rights offering is a direct sale of stock to an institution that participates in the primary
market. Answer: C
Learning Outcome: F-01 Describe the different financial markets and the role of the financial
managers
AACSB: 8 Application of knowledge (Able to translate knowledge of business and management
into practice)
Question Status: Previous Edition
Learning Goal: Learning Goal 2
8) A rights offering is the
A) initial offering of securities to the public.
B) offering of new securities to current shareholders on a pro-rata basis.
C) sale of newly issued shares of stock to the general public.
D) sale of securities directly to a select group of investors.
4
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mynursytest.store
