Quiz Ch 02 – Identifying Stock Transaction Type
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
Your recent sale of 200 Disney shares through a broker signifies which type of transaction?
Your recent sale of 200 Disney shares through a broker signifies which type of transaction?
True or false: To determine the annual rate of return for a stock, add its yearly dividend and price change, then divide by the initial price.
True or false: The NYSE is categorized as a ‘spot’ market due to its physical location, whereas the NASDAQ, lacking a central physical location, is not considered a spot market.
True or false: When a corporation’s shares are predominantly owned by a select group of individuals affiliated with the company’s management, it is referred to as closely held stock.
True or false: Hedge funds share certain similarities with mutual funds; however, the main distinctions lie in their relatively lower regulation, greater purchasing flexibility, and the limitation of their investors to affluent, experienced individuals and institutions.
True or false: The acronym IPO stands for ‘initial public offering’, denoting the process of a company’s first issuance of stock to the public, rather than ‘individual purchase order’.
True or false: A common stock share is NOT a derivative, while an option to purchase the stock qualifies as a derivative due to its value being derived from the stock’s value.
True or false: Private markets, such as the NYSE, involve transactions managed by organization members, whereas public markets, including the NASDAQ, allow anyone to engage in transactions.
True or false: In a Dutch auction for new stock, individual investors directly bid on shares, specifying prices and quantities. The market clearing price, the highest to sell all shares, is determined. Bidders at or above this price can purchase shares.
True or false: By summing the yearly dividend and price change of a stock, then dividing by its initial price, you can calculate the annual rate of return. If this is done for a comprehensive portfolio like the S&P 500, averaging these returns offers insight into the stock market returns for the relevant year.