 |
| 1 | |
A country's primary market |
| | A) | Is the market that has the largest number of shares traded through it. |
| | B) | Is the market that has the largest total value of shares traded through it. |
| | C) | Is the market that has the largest number and value of shares traded through it, like the NYSE for the U.S. |
| | D) | Is where the sale of securities by corporations to initial investors takes place. |
|
|
|
| 2 | |
In a call market |
| | A) | Traders know ahead of time the price that their orders will be executed at. |
| | B) | An agent of the exchange accumulates, over a period of time, a batch of orders that are periodically executed. |
| | C) | An agent of the exchange periodically calls out the name of the issue. At this point, traders announce their bid and ask prices for the issue, and seek counterparts to a trade. |
| | D) | Market and limit orders may be executed at any time during business hours. |
|
|
|
| 3 | |
Cross listing |
| | A) | Refers to a firm having its equity shares listed on one or more foreign exchanges, in addition to the home country stock exchange. |
| | B) | Is not an option for non-MNCs. |
| | C) | Is only an option for MNCs |
| | D) | B and C are both correct |
|
|
|
| 4 | |
An ADR |
| | A) | Is a mechanism for the avoidance of taxes, especially capital gains taxes, on shares of foreign stocks. |
| | B) | Are bearer securities, not registered securities. |
| | C) | is a receipt representing a number of foreign shares that are deposited in a U.S. bank. |
| | D) | None of the above are true. |
|
|
|
| 5 | |
Changes in exchange rates |
| | A) | Generally explain a larger portion of the variability of foreign bond indexes than foreign equity indexes. |
| | B) | Generally explain a larger portion of the variability of foreign equity indexes than foreign bond indexes. |
| | C) | Do not affect the variability of foreign equity indexes or foreign bond indexes. |
| | D) | Affect all foreign stock markets equally. |
|
|
|
| 6 | |
On the Paris bourse, shares of Avionelle trade at €45. The spot exchange rate is $1.40 = €1.00. What is the no-arbitrage U.S. dollar price of an ADR? Assume that transactions costs are negligible. |
| | A) | $63 |
| | B) | $32.14 |
| | C) | $45 |
| | D) | $45.50 |
|
|
|
| 7 | |
On the Paris bourse, shares of Avionelle trade at €45, while in New York, Avionelle trades as an ADR at $60. The spot exchange rate is $1.40 = €1.00. What can you do to earn a profit? Assume that transactions costs are negligible. |
| | A) | Buy the ADR, short sell the shares on Paris |
| | B) | Short sell the ADR, go long in Paris |
| | C) | Buy the ADR and the shares in Paris |
| | D) | Sell the euro |
|
|
|
| 8 | |
Market capitalization |
| | A) | Is generally higher in developing countries. |
| | B) | Depends on the exchange rate |
| | C) | Is generally higher in developed countries |
| | D) | None of the above refer to market cap |
|
|
|
| 9 | |
The exchange markets in the United States are |
| | A) | Call markets |
| | B) | Crowd markets |
| | C) | Agency/auction markets |
| | D) | OTC |
|
|
|
| 10 | |
A specialist |
| | A) | Is an investor who only holds shares issued by one company |
| | B) | Is a dealer in the OTC market |
| | C) | Makes a market by holding an inventory of a security |
| | D) | none of the above |
|
|
.