9) What is the bid-ask spread?
A) the diference in price available for an immediate sale of a stock and the immediate
purchase of the stock
B) all of the costs and fees that a stock exchange charges in order to process a transaction
C) the rise or fall in the value of a stock between the time it is acquired by an investor and
sold by that investor
D) the diference in the selling price of a stock between diferent exchanges
AACSB Objective: Analytic Skills
Author: DS
Question Status: Revised
10) Stella places a market order with her broker to buy 1,000 shares of OneWorld Corp.
The broker buys 1,000 shares at $15.80 each, and sells them to Stella at $15.95 each. He
also charges a commission of $12.00. What is bid-ask spread in this case?
A) $162
B) $120
C) $210.00
D) $150
AACSB Objective: Analytic Skills
Author: DS
Question Status: Revised
11) Which of the following is a measure of the aggregate price level of collections of pre-
selected stocks?
A) NASDAQ
B) S&P 500
C) NYSE
D) Euronext
AACSB Objective: Analytic Skills
Author: DS
Question Status: Previous Edition
21
Use the igure for the question(s) below.
12) Using the above information, how much would you pay for a share of BHP Billiton
stock?
A) $41.91
B) $41.93
C) $41.65
D) $41.59
AACSB Objective: Analytic Skills
Author: DS
Question Status: Previous Edition
22
Use the igure for the question(s) below.
13) Using the above information, how much would you receive if you sold a share of
Washington Post stock?
A) $683.00
B) $677.62
C) $678.50
D) $677.64
AACSB Objective: Analytic Skills
Author: DS
Question Status: Previous Edition
23
Use the igure for the question(s) below.
14) Based on the information shown above, what would it cost to buy 1,000 shares of the
above stock?
A) $91,110
B) $91,300
C) $91,320
D) $91,650
AACSB Objective: Analytic Skills
Author: DS
Question Status: Previous Edition
24
Use the igure for the question(s) below.
15) Based on the information shown above, how much would you receive from selling 2,000
shares of the above stock?
A) €40,840
B) €40,740
C) €41,000
D) €42,560
AACSB Objective: Analytic Skills
Author: DS
Question Status: Revised
25
Use the igure for the question(s) below.
16) What is the bid-ask spread on the stock shown above?
A) 1 cent
B) 3 cents
C) 6 cents
D) 12 cents
AACSB Objective: Analytic Skills
Author: DS
Question Status: Previous Edition
26
Use the igure for the question(s) below.
17) How much money would a stock exchange make from buying and selling 500 shares of
the stock under the conditions shown above?
A) $250
B) $3,000
C) $5,875
D) $210,375
AACSB Objective: Analytic Skills
Author: DS
Question Status: Revised
18) What are the terms for the two types of prices quoted for a stock on an exchange?
AACSB Objective: Analytic Skills
Author: SS
Question Status: Previous Edition
19) What is the general relation of the two types of prices quoted for a stock on a
exchange?
AACSB Objective: Analytic Skills
Author: SS
Question Status: Revised
27
20) What is the term for the applicable price that I will pay, if I have to buy a stock?
AACSB Objective: Analytic Skills
Author: SS
Question Status: Previous Edition
21) What is the term for the applicable price that the seller gets when he sells a stock on
the exchange?
AACSB Objective: Analytic Skills
Author: SS
Question Status: Previous Edition
22) What are the main diferences between the NYSE and NASDAQ stock markets?
AACSB Objective: Analytic Skills
Author: SS
Question Status: Previous Edition
1.6 Financial Institutions
1) Raising new capital by issuing bonds is an example of a commercial banking activity.
AACSB Objective: Analytic Skills
Author: WC
Question Status: New
28
2) Put the following steps of the inancial cycle in the correct order.
I. Money lows to companies who use it to fund growth through new products.
II. People invest and save their money.
III. Money lows back to savers and investors.
A) I, II, and III
B) II, I, and III
C) III, II, and I
D) II, III, and I
AACSB Objective: Relective Thinking Skills
Author: WC
Question Status: Revised
3) Investments by wealthy individuals and endowments is a major source of money for each
of the following EXCEPT ________.
A) private equity funds
B) hedge funds
C) venture capital funds
D) mutual funds
AACSB Objective: Analytic Skills
Author: WC
Question Status: New
4) Which of the following is NOT a role of inancial institutions?
A) moving funds from savers to borrowers
B) spreading out risk-bearing
C) printing money for borrowers
D) moving funds though time
AACSB Objective: Analytic Skills
Author: WC
Question Status: Revised
29