6. When an IPO is oversubscribed, this means that the demand for shares at the offering price is less than the number of shares issued. a. True b. False 7. The NYSE, where the stocks of most of the largest U.S. corporations are traded, is an example of a money market, whereas capital markets are where short-term, highly-liquid debt securities are traded. a. True b. False 8. Derivatives are financial assets (such as options and futures) whose values are derived from the values of some other “underlying” assets. They can be used either to reduce risks or to speculate. a. True b. False 9. The top ten world banking companies are all based in the United States. a. True b. False 10. In recent years, every careful study that has been undertaken has found empirical support for the efficient markets hypothesis (EMH). a. True b. False 11. Because of security regulations, Internet sources such as brokerage firms, Yahoo, and Dow Jones are prohibited from updating stock prices during the day. As a result, the only time you can see stock prices quoted on the Internet is after the stock market has closed. a. True b. False 12. If a stock trades infrequently and has above average volatility, we would expect it to have a smaller than average bid-ask spread. a. True b. False 13. In the years since 1995, every time the market earned a negative total return, it earned a positive total return the following year. a. True b. False 14. Because they often invest in risky assets, hedge funds have traditionally been among the most highly regulated financial institutions. a. True b. False
