Essentials Of Investments
11th Edition
ISBN: 9781260316193
Author: Bodie
Publisher: MCG
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Chapter 3, Problem 12PS
Are the following statements true or false? If false, correct them. (LO 3-4)
a. An investor who wishes to sell shares immediately should ask his or her broker to enter a limit order.
b. The ask price is less than the bid price.
c. An issue of additional shares of stock to the public by Microsoft would he called an IPO.
d. An ECN (Electronic Communication Network) is a computer link used by security dealers primarily to advertise prices at which they are willing to buy or sell shares.
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Which of the following is NOT a function of an organised security exchange?
Question 13 options:
1)
Providing a centre for securities to be offered to potential investors for the first time.
2)
Providing a marketplace for the demand and supply of securities.
3)
Providing a venue for determining security prices, making it easier to float new securities.
4)
Establishing security prices, making them to be widely available to investors.
A4)
An arrangement with a broker to borrow stocks from them and then sell it in the market, with the hope
that they earn a profit by buying the stock back again after it has fallen in price is called Select one: a.
smart money. Ob. short sales. Oc. behavioral finance. Od. random walk.
Chapter 3 Solutions
Essentials Of Investments
Ch. 3.8 - Suppose you by 100 shares of stock initially...Ch. 3.8 - Repeat Question 1 assuming your initial margin was...Ch. 3.9 - Suppose you sell short 100 shares of stock...Ch. 3.9 - Repeat Question t (b) but now assume that the...Ch. 3 - Prob. 1PSCh. 3 - What are some different components of the...Ch. 3 - Prob. 3PSCh. 3 - Prob. 4PSCh. 3 - In what cirecumstances are private placements more...Ch. 3 - Prob. 6PS
Ch. 3 - Prob. 8PSCh. 3 - How do margin trades magnify both the upside...Ch. 3 - A market order has: (LO 3-2) a. Price uncertainty...Ch. 3 - Where would an illiquid security in a developing...Ch. 3 - Are the following statements true or false? If...Ch. 3 - Prob. 13PSCh. 3 - Prob. 14PSCh. 3 - Prob. 15PSCh. 3 - Old Economy Traders opened an account to...Ch. 3 - Prob. 17PSCh. 3 - You are bullish on Telecom stock. The current...Ch. 3 - Prob. 19PSCh. 3 - Prob. 20PSCh. 3 - Prob. 21PSCh. 3 - Prob. 22PSCh. 3 - Prob. 23PSCh. 3 - Prob. 24CCh. 3 - Prob. 25CCh. 3 - Are all of the brokerage firms suitable ii you...Ch. 3 - Choose two of the firms listed. Assume that you...Ch. 3 - Prob. 4WM
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- 54) Which of the following is an electronic marketplace for buying and selling global stocks and securities? A) New York Stock Exchange B) Over-the-counter market C) NASDAQ D) Tokyo foreign securities exchange E) London foreign securities exchange 55) Jennifer Fritz is thinking about purchasing the stock of the Sunshine Corporation at the current market price. What type of order should she place? A) Market order B) Limit order C) Stop order D) Discretionary order E) Common order 56) Ashley Riley wants to buy the stock of XYZ Company at a specified price or better. What type of order should she place? A) Market order B) Limit order C) Stop order D) Discretionary order E) Common order 57) Carol Fisher wants to sell the stock of Hathaway International at the next available price after the market price reaches $50 per share. What type of order should she place? A) Market order B) Limit order C) Stop order D) Discretionary order E) Common order 58) A long-term technique used by investors…arrow_forwardUse an internet search or a generative Al site to answer the following questions. Be sure to cite your sources. You must post then comment on someone else's post. 1. What does it mean to have a long position in a stock? 2. What does it mean to have a short position in a stock? 3. Why is a short position risky? 4. Which kind of trade is sure to execute limit order or market order and why?arrow_forward6. Stock market regulation Use the following table to match each term to its corresponding description. Description Restrictions on trading when exchanges believe market participants need more time to gather complete information about a stock. The agency that attempts to protect investors by ensuring firms fully disclose all relevant information that could affect the values of securities. The division that reviews security trades by various organizations that facilitate the trading of securities, such as brokers and stock exchanges. Regulation that requires that investors receive important information about securities being offered on public exchanges and prohibits misleading or unethical trading practices on security exchanges by requiring stock exchanges to discipline financial market participants who violate the regulation. Term Circuit Breakers Sarbanes-Oxley Act of 2002 Securities and Exchange Acts of 1933 and 1934 Trading Haltsarrow_forward
- It safeguards the investing public against losses in case of fraud, failure or insolvency of brokers and dealers who are members of the exchange. a. alert levels b, Phil. Stock Exchange c. Securities Investor Protection fund Inc. d. Dow Jones Industrial Averagearrow_forwardWhat comment can be made about this? Investing in cryptocurrency can help provide diversification in a portfolio since historically, cryptos have shown no price correlation with the U.S. stock market (Levy, 2021). Also, unlike banks and other intermediaries, the blockchain is open 24/7, the transactions provide transparency plus anonymity because though the crypto wallet is viewable to the public, the owners of the wallets are anonymous. And, there is a lower risk of error since the transactions involve little human interaction (Voigt & Rosen, 2021).arrow_forwardWhich of these has the biggest potential risk area? O a. Cash Machines O b. Mobile Banking O c. Cheque Books O d. Sharesarrow_forward
- Mr. Salim is the owner of an audit firm who audit the financial statements of the companies by charging fee. Lulu hypermarket is one of their old clients. Last month lulu hypermarket distributed discount coupon to their customers and it was a coincident that external auditors were also there, and they also got some coupons. Which of the following threat do you think can arise in this situation? a. Familiarity threat b. None of the options c. Self-interest threat d. Self-review threatarrow_forwardThe least risky capital market security isa. preferred stock.b. common stock.c. corporate bonds.d. treasury bonds Which statement is true of digital legal tender?a. Digital legal tender replaces physical notes and coin.b. Digital legal tender issued into the economy will not save on costs associated with printingphysical notes.c. Distributed ledger technology can enable the central banks to issue a secure, transparent andefficient digital legal tender.d. Digital legal tender is worth more than physical notesarrow_forwardT or F Organized security exchanges provide several benefits to both corporations and investors. They (l) provide a continuous market, (2) establish and publicize fair security prices, and (3) help businesses raise new financial capital. Financial intermediary issues its own type of security which is called an indirect security. Securities are first offered for sale in a primary market. These transactions increase the total stock of financial assets in existence in the economy.arrow_forward
- Show steps on how to solve itarrow_forward5. Choose which of the following situations indicate a weakness in Internal control? Group of answer choices a. The purchasing agent invests in a publicly traded mutual fund that lists the stock of one of the organization's suppliers in its portfolio. b. Purchasing procedures are well designed and are followed unless otherwise directed by the purchasing supervisor. c. Normal operational purchases fall in the range from US $500 to US $1,000 with two signatures required for purchases over US $1,000. d. Pre-numbered blank purchase orders are secured within the purchasing department.arrow_forwardExplain whether the following statements are true or false.a. Derivative transactions are designed to increase risk and are used almost exclusivelyby speculators who are looking to capture high returns.b. Hedge funds typically have large minimum investments and are marketed to institutionsand individuals with high net worths.c. Hedge funds have traditionally been highly regulated.d. The New York Stock Exchange is an example of a stock exchange that has a physicallocation.e. A larger bid-ask spread means that the dealer will realize a lower profit.arrow_forward
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