6.What market allows two investors to trade securities without the services of a broker?

A)   Fourth market transaction.

B)   Third market transaction.

C)   Over-the-counter market transaction.

D)   Regional exchange transaction.

7.Which of the following statements about markets or short selling is FALSE?

A)   Internal market efficiency means getting the lowest possible transaction costs.

B)   Secondary markets provide liquidity for primary market investors.

C)   The third market is the direct exchange of securities between investors.

D)   A short seller must pay all dividends to the lender of the stock.

8.Which of the following is a security market characterized by direct trading of exchange-listed securities among investors?

A)   OTC market.

B)   Third market.

C)   New York Stock Exchange.

D)   Fourth market.

9.An over-the-counter market contains which of the following?

A)   All trading of securities not listed on registered exchanges.

B)   Dealers who make markets for securities.

C)   Negotiated trades.

D)   All of these choices are correct.

10.Which of the following statements about securities markets is least accurate?

A)   Characteristics of a well-functioning securities market include: many buyers and sellers willing to trade at below market price, low bid-ask spreads, timely information on price and volume of past transactions, and accurate information on supply and demand.

B)   Secondary markets, such as the over-the-counter (OTC) market, provide liquidity and price continuity.

C)   When Conglomerate, Inc. trades directly with MultiNational, Ltd., it is using the fourth market.

D)   A limit buy order and a stop buy order are both placed below the current market price.

答案和详解如下：

6.What market allows two investors to trade securities without the services of a broker?

A)   Fourth market transaction.

B)   Third market transaction.

C)   Over-the-counter market transaction.

D)   Regional exchange transaction.

The correct answer was A)

The fourth market refers to transactions that take place between two investors without the use of a broker. Most often this transaction occurs between two institutional investors that want to make a high volume trade without incurring the expensive brokerage fees.

7.Which of the following statements about markets or short selling is FALSE?

A)   Internal market efficiency means getting the lowest possible transaction costs.

B)   Secondary markets provide liquidity for primary market investors.

C)   The third market is the direct exchange of securities between investors.

D)   A short seller must pay all dividends to the lender of the stock.

The correct answer was C)

Non-members of the exchange in the over-the-counter market trade exchange-listed securities in the third market. The fourth market is the direct exchange of securities between investors.

8.Which of the following is a security market characterized by direct trading of exchange-listed securities among investors?

A)   OTC market.

B)   Third market.

C)   New York Stock Exchange.

D)   Fourth market.

The correct answer was D)

The third market refers to trading of exchange-listed securities on the OTC. Both the OTC & NYSE use dealers, while trades on the fourth market are executed without the benefit of a dealer.

9.An over-the-counter market contains which of the following?

A)   All trading of securities not listed on registered exchanges.

B)   Dealers who make markets for securities.

C)   Negotiated trades.

D)   All of these choices are correct.

The correct answer was D)

An over the counter market includes all trading of securities not listed on registered exchanges, contains dealers who make markets in securities, and is a negotiated market.

10.Which of the following statements about securities markets is least accurate?

A)   Characteristics of a well-functioning securities market include: many buyers and sellers willing to trade at below market price, low bid-ask spreads, timely information on price and volume of past transactions, and accurate information on supply and demand.

B)   Secondary markets, such as the over-the-counter (OTC) market, provide liquidity and price continuity.

C)   When Conglomerate, Inc. trades directly with MultiNational, Ltd., it is using the fourth market.

D)   A limit buy order and a stop buy order are both placed below the current market price.

The correct answer was D)

A limit buy is placed below the current market price, but a stop buy order is placed above the current market price (stop buy orders are often placed to protect a short sale from a rising market).

The other choices are true. A well-functioning securities market includes the following characteristics:

  timely and accurate information on price and volume of past transactions.

  timely and accurate information on the supply and demand for current transactions.

  liquidity (as indicated by low bid-ask spreads).

  marketability.

  price continuity.

  depth (many buyers and sellers willing to transact above and below the current price).

  internal efficiency (low transaction costs).

  informational/external efficiency (rapidly adjusting prices).

The fourth market is the direct exchange of securities (no intermediaries and no transaction costs).