the economics of money, banking, and financial markets

350 #

© 2014 Pearson Canada Inc.#

21. 
    

    The Toronto Stock Exchange (TSX) is ____.
    A) an commodities exchange
    B) an investment bank
    C) a secondary market
    D) a dealer
    Answer: C
    Diff: 1 Type: MC Page Ref: 283
    Skill: Recall
    Objective List: 12.4 Understanding the operation of securities markets

    
    


22. 
    

    Securities are traded on the floor of the exchange with the help of a special kind of dealer-
    broker called a(n) ____.
    A) underwriter
    B) specialist
    C) banker
    D) manager
    Answer: B
    Diff: 1 Type: MC Page Ref: 283
    Skill: Recall
    Objective List: 12.4 Understanding the operation of securities markets

    
    


23. 
    

    Describe the underwriting process.
    Answer: When the corporation decides which kind of financial instrument it will issue, it offers
    them to underwriters–investment bankers that guarantee the corporation a price on the securities
    and then sell them to the public. If the issue is small, only one investment-banking firm
    underwrites it (usually the original investment banking firm hired to provide advice on the issue).
    If the issue is large, several investment-banking firms form a syndicate to underwrite the issue
    jointly, thus limiting the risk that any one investment bank must take.
    Diff: 3 Type: SA Page Ref: 282
    Skill: Recall
    Objective List: 12.4 Understanding the operation of securities markets