Equity Investments - Equity Investments Section 1
11. Which of the following markets is most suitable for securities that are unique or illiquid?
- Option : C
- Explanation : Brokered markets are most suitable for securities that are unique or illiquid.
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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.
- Option : A
- Explanation : In call markets, orders are accumulated and securities trade only at specific times.
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- Option : C
- Explanation : Operationally efficient markets are liquid markets in which the costs of trading commissions, bid–ask spreads, and order price impacts are low.
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- Option : C
- Explanation : 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.
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15. An economy that best utilizes its resources is most likely described as:
- Option : A
- Explanation : Economies that use resources in such a way that they are most valuable are allocationally efficient.
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