Stocks HW1 Review

Rank the following types of markets from least integrated and organized to most integrated and organized:
1. Brokered markets
2. Continuous auction markets
3. Dealer markets
4. Direct search markets
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Terms in this set (31)
Which one of the following statements about IPOs is not true?
IPOs generally have been poor long-term investments.
IPOs often provide very good initial returns to investors.
IPOs generally provide superior long-term performance as compared to other stocks.
Shares in IPOs are often primarily allocated to institutional investors.
Barnegat Light sold 200,000 shares in an initial public offering. The underwriter's explicit fees were $90,000. The offering price for the shares was $35, but immediately upon issue, the share price jumped to $43. What is the best estimate of the total cost to Barnegat Light of the equity issue?$1,690,000The term latency refers to _______.the amount of time it takes to accept, process, and deliver a trading order.Explicit costs of a stock IPO tend to be around _______ of the funds raised.7%The process of polling potential investors regarding their interest in a forthcoming initial public offering (IPO) is called buildingThe _______ is the most important dealer market in the United States, and the _______ is the most important auction market.NASDAQ; NYSEIn a _______ underwriting arrangement, the underwriter assumes the full risk that shares may not be sold to the public at the stipulated offering price.firm-commitmentFinancial intermediaries exist because small investors cannot efficiently _______.All of the choices are correct.Underwriting is one of the services provided by _______.investment bankersAccording to multiple studies by Ritter, initial public offerings tend to exhibit _______ performance initially and _______ performance over the long term.good; badPurchases of new issues of stock take place the primary marketWhich one of the following statements about IPOs is not true?IPOs generally provide superior long-term performance as compared to other stocks.Privately held firms may have only _______ shareholders.2,000Financial institutions that specialize in assisting corporations in primary market transactions are called _______.investment bankersThe term "underwriting syndicate" describes _______.the investment banks that participate in the underwritingAccording to SEC Rule 415 regarding shelf registration, firms can gradually sell securities to the public for _______ following initial registration.2 yearsPrivate placements can be advantageous, compared to public issue, because: 1. Private placements are cheaper to market than public issues. 2. Private placements may still be sold to the general public under SEC Rule 144A. 3. Privately placed securities trade on secondary markets.1 onlyThe _______ requires full disclosure of relevant information relating to the issue of new securities.Securities Act of 1933Which of the following is not an example of a financial intermediary? Goldman Sachs Allstate Insurance First Interstate Bank IBMIBMThe largest nongovernmental regulator of securities firms in the United States is _______.The Financial Industry Regulatory AuthorityIndividuals may find it more advantageous to purchase claims from a financial intermediary rather than directly purchasing claims in capital markets because: 1. Intermediaries are better diversified than most individuals. 2. Intermediaries can exploit economies of scale in investing that individual investors cannot. 3. Intermediated investments usually offer higher rates of return than direct capital market claims.Under firm-commitment underwriting, the _______ assumes the full risk that the shares cannot be sold to the public at the stipulated offering price.underwriter