1. Which of the following statements is correct?

1. There are only 100 stocks in the DJIA.
2. One of the research findings about Initial Public Offerings (IPOs) is that on average, the long-run performance of IPO stocks is not particularly attractive.
3. If the issuer is selling securities for the first time, it is referred to as a seasoned issue.
4. All the answers are correct.
5. Mutual funds and ETFs underwrite new issues by purchasing the securities and assuming the risk of reselling them to investors.

2. Which of the following statements is incorrect?

1. All the answers are correct except one.
2. Primary markets involve investment bankers who specialize in selling new securities and they offer the issuer several services including advisory, underwriting, and marketing.
3. Unlike the DJIA, each stocks importance in the S&P 500 index is based on relative market value instead of relative per-share price.
4. One of the research findings about Initial Public Offerings (IPOs) is that IPO stocks generally skyrocket on their first day of trading, which suggests that they are underpriced at initial offering.
5. The Russell 2000 is often cited as an index of large cap common stocks.

3. BATS is a(n):

1. security market regulatory agency.
2. none of the answers is correct.
3. exchange traded fund (ETF).
4. security exchange.
5. electronic communication network.

4. Which of the following statements is incorrect?

1. Blue-chip stocks are well-known, stable, mature companies with long records of earnings and dividends.
2. An IPO is the sale of a publicly traded company, while a seasoned issue represents the first time an issuer has sold securities to the public.
3. A price-weighted series gives more weight to higher priced stocks, whereas under a value-weighted approach, each stocks importance is based on relative market value, not price per share.
4. All the answers are correct except one.
5. nvestment banker is a firm specializing in the sale of new securities to the public, typically by underwriting the issue.