Question

1. Trades on the NYSE are generally completed by having a brokerage firm acting as a "dealer" buy securities and adding them to its inventory or selling from its inventory. The NASDAQ, on the other hand, operates as an auction market, where buyers offer to buy, and sellers to sell, and the price is negotiated on the floor of the exchange.

True or False

2.

Which of the following is an example of a capital market instrument?

	a.	Preferred stock.
	b.	Money market mutual funds.
	c.	Commercial paper.
	d.	U.S. Treasury bills.
	e.	Banker's acceptances.

3. The NYSE is defined as a "spot" market purely and simply because it has a physical location. The NASDAQ, on the other hand, is not a spot market because it has no one central location.

True or False

4. Each stock's rate of return in a given year consists of a dividend yield (which might be zero) plus a capital gains yield (which could be positive, negative, or zero). Such returns are calculated for all the stocks in the S&P 500. A weighted average of those returns, using each stock's total market value, is then calculated, and that average return is often used as an indicator of the "return on the market."

True or False

5.

The NYSE is defined as a "primary" market because it is one of the largest and most important stock markets in the world.

True or False

6.

The term IPO stands for "individual purchase order," as when an individual (as opposed to an institution) places an order to buy a stock.

True or False

Answer 1