A stock market is a public market for trading a company's __________.

a. equities

b. debt securities

The difference between the price at which a dealer will sell a certain security and the price at which a dealer will buy a security is called the ____________.

a. bid price

b. bid-ask spread

c. ask price

Fernando, a trader, wants to buy 1,000 shares of XYZ stock, while a second trader, Ally, is willing to sell 1,500 shares of the same stock. Unfortunately, Fernando and Ally don't know one another, and must complete their transactions using the stock exchange's market-making dealer. XYZ's market-maker is willing to sell her shares for 25.60 per share and purchases addition shares for 24.00 per share. Select the most appropriate values in the following table:

TERM VALUE:

Bid Price

Ask Price

Bid-ask Spread

If the market-maker is willing to purchase the entire block of 1,500 shares from Ally and, from that block, resell 1,000 shares to Fernando then the market-maker's net profit from Fernando's transaction-excluding an inventory effects----will be __________.

a. 1,600

b. 416

c. 800

d. 2400

Companies that are owned by a group of investors, who could also be associated with the company's management, make initial public offerings. Such companies are referred to as___________________________________.

a. publicly owned corporations

b. closely held corporations

When the demand for an initial public offering (IPO) of securities exceeds the number of securities issued, the offering is deemed to be:

a. oversubscribed

b. undersubscribed

Indigo Inc. is going public and issuing 150000 shares of common stock. The capital raised in the IPO will fund the company's proposed expansion. A Dutch auction is used to allocate shares in the Indigo IPO. The following table shows the number of shares requested by potential investors in each row.

Bids Number of shares requested Price per share

Bidder#1 50,000 $60

Bidder#2 100,000 $58

Bidder#3 150,000 $56

Bidder#4 200,000$54

Bidder#5 250,000 $52

Bidder#6 300,000$50

What should be the firm's IPO offer price?

$58

$56

$55

$52

$53