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Reading 55: Market Organization and Structure-LOS h 习题精选

Session 13: Market Organization, Market Indices, and Market Efficiency
Reading 55: Market Organization and Structure

LOS h: Compare and contrast market orders with limit orders.

 

 

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


 

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).
  • operational efficiency (low transaction costs).
  • informational efficiency (rapidly adjusting prices).

An order to sell a security at the best price available is most likely a:

A)
limit order.
B)
market order.
C)
stop order.


A market order is an order to buy or sell a security immediately at the best available price. A limit order is an order to buy at the specified limit price or lower, or to sell at the limit price or higher. A stop order is an order to buy if the market price increases to the specified stop price, or to sell if the market price decreases to the stop price.

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