Capital Markets - Midterm Quiz 3

For the ______________________ , the secondary market provides an efficient platform for trading of his securities.

• general investor

• management of the company

• employees

These are the borrowers or deficit-units, who issue securities to raise funds for their business activities.

• issuers

• investors

• intermediaries

These are the agents who match the needs of users and suppliers of funds for a commission.

• issuers

• investors

• intermediaries

A stock exchange permits the security prices to be determined by the competitive forces.

• True

• False

In the stock exchange, security prices are set by negotiations off the floor, where one party might have a bargaining advantage.

• True

• False

In the stock exchange, the bidding process flows from the demand and supply underlying each security.

• True

• False

The holders of such shares are members of the company and have voting rights.

• equity shares

• rights shares

• bonus shares

Owners of these kinds of shares enjoy priority over the equity shareholders in payment of surplus.

• participating preference shares

• preference shares

• cumulative preference shares

These investments are often considered risk-free investments because when it comes time for redemption at maturity, the government can always print more money to satisfy the demand.

• government securities

• debentures

• bonds

A negotiable certificate evidencing indebtedness.

• True

• False