350 #
© 2014 Pearson Canada Inc.#
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
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
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