Essentials of Investments Chapter 3 – Questions & Correct Answers 100% LATEST UPDATE
2026
primary market - (answer)market for new issues of securities
secondary market - (answer)market for already-existing securities
private placement - (answer)primary offerings in which shares are sold directly to a small group of
institutional or wealthy investors
initial public offering (ipo) - (answer)first sale of stock by a formerly private company
underwriters - (answer)purchase securities from the issuing company and resell them to the public
prospectus - (answer)a description of the firm and the security it is issuing
dealer markets - (answer)markets in which traders specializing in particular assets buy and sell for their
own accounts
auction market - (answer)a market where all traders meet at one place to buy or sell an asset
bid price - (answer)the price at which a dealer of other trader is willing to purchase a security
ask price - (answer)the price at which a dealer or other trader will sell a security
bid-ask spread - (answer)the difference between the bid and asked prices
limit buy (sell) order - (answer)an order specifying a price at which an investor is willing to buy or sell a
security
stop order - (answer)trade is not to be executed unless stock hits a price limit
2026
primary market - (answer)market for new issues of securities
secondary market - (answer)market for already-existing securities
private placement - (answer)primary offerings in which shares are sold directly to a small group of
institutional or wealthy investors
initial public offering (ipo) - (answer)first sale of stock by a formerly private company
underwriters - (answer)purchase securities from the issuing company and resell them to the public
prospectus - (answer)a description of the firm and the security it is issuing
dealer markets - (answer)markets in which traders specializing in particular assets buy and sell for their
own accounts
auction market - (answer)a market where all traders meet at one place to buy or sell an asset
bid price - (answer)the price at which a dealer of other trader is willing to purchase a security
ask price - (answer)the price at which a dealer or other trader will sell a security
bid-ask spread - (answer)the difference between the bid and asked prices
limit buy (sell) order - (answer)an order specifying a price at which an investor is willing to buy or sell a
security
stop order - (answer)trade is not to be executed unless stock hits a price limit
