1. All large high-tech companies have their stocks listed on the New York Stock Exchange. True or false?

a.True

b.False

2. Even if markets are efficient and all stocks and companies are fairly priced, an investor should still be careful

when selecting stocks for his or her portfolio. Most importantly, the portfolio should be diversified, with a mix of

stocks from various industries along with some bonds and other fixed-income securities. True or false?

a.True

b.False

3. Households and businesses with surplus funds expect to earn a positive return on their investments, while those

who borrow money expect to pay for the use of the funds. True or false?

a.True

b.False

4. Financial intermediaries such as banks and mutual funds help transfer capital from those with a surplus of funds

to those who need capital. True or false?

a.True

b.False

5. In Google's IPO, it conducted a Dutch auction where investors directly place bids for shares of stock. In a Dutch

auction, the actual transaction price is set at the highest price that causes all of the offered shares to be

purchased. Investors who submitted bids at or above this clearing price received shares of the company's stock.

True or false?

a.True

b.False

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. True or false?

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. True or false?

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. True or false?

a.True

b.False

9. The top ten world banking companies are all based in the United States. True or false?

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). True or false?

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. True or false?

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. True or false?

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. True or false?

a.True

b.False

14. Because they often invest in risky assets, hedge funds have traditionally been among the most highly

regulated financial institutions. True or false?

a.True

b.False