Equity Investments MCQ - Equity Investments Section 1

11 Which of the following markets is most suitable for securities that are unique or illiquid?

Brokered markets are most suitable for securities that are unique or illiquid.

12 Which of the following statements is least accurate?

A
In call markets, trades occur at any time the market is open with prices set either by the auction process or by dealer bid-ask quotes.
B
Quote-driven markets are sometimes also called dealer markets, pricedriven markets, or over-the- counter markets.
C
In order-driven markets, orders are executed using trading rules, which are necessary because traders are usually anonymous.

In call markets, orders are accumulated and securities trade only at specific times.

13 A financial system characterized by liquid markets, low commissions and order price impacts is said to be which of the following?

Operationally efficient markets are liquid markets in which the costs of trading commissions, bid–ask spreads, and order price impacts are low.

14 Markets that have high costs of trading in terms of dealer’s commissions, bid-ask spreads and order price impacts are most likely to be:

Cost of trading determines the operational efficiency of a financial market. If a market has high cost of trading, it is operationally inefficient. If filling orders is very costly, informed trading may not be possible.

15 An economy that best utilizes its resources is most likely described as:

Economies that use resources in such a way that they are most valuable are allocationally efficient.