Chapter 7, Problem 1QP

a.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Answer to Problem 1QP

The given statement is classified as“False”.

Explanation of Solution

The reasons supporting the statement to be false is as follows:

Generally, the bid price is consistently lower comparative with the ask price, which results in the bid-ask spread.

Therefore, the given statement is classified as “False”.

b.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Answer to Problem 1QP

The given statement is classified as “False”.

Explanation of Solution

The reasons supporting the statement to be false is as follows:

The investor who want to sell quickly at the best accessible price would enter a market order.

Therefore, the given statement is classified as “False”.

c.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Answer to Problem 1QP

The given statement is classified as “False”.

Explanation of Solution

The reasons supporting the statement to be false is as follows:

Sales by and between investors happen in the secondary market. Primary offerings are said to arise in the primary market and are sold by the company which issues it.

Therefore, the given statement is classified as “False”.

d.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Answer to Problem 1QP

The given statement is classified as “False”.

Explanation of Solution

The reasons supporting the statement to be false is as follows:

ECNs are computer related systems that organizes and links different merchants with one another.

Therefore, the given statement is classified as “False”.