Financial Markets Coursera week 6 Quiz

In this blog you will find the correct answer of the Coursera quiz Financial Markets Coursera week 6 Quiz mixsaver always try to brings best blogs and best coupon codes

Lesson #14 Quiz

1. Which of the following two options are deals that underwriters make with corporations?

Best efforts: the underwriters tries to sell shares at some price, and the deal collapses if they don’t.
Short cut: the underwriters will cut the price of the shares if some of them remain unsold.
Loss safe: the underwriter will pay a penalty to the company if not all of the shares sell.
Bought deal: the underwriter will purchase all unsold shares.

2. Why do underwriters usually underprice IPOs?

They don’t know how much the company is really worth
They want to create public excitement
They do not want the company to make as much money as it could.
They want their favorite customers to be able to buy shares for cheaper

3. Which of the following was NOT a feature that Charles Ellis believed made Goldman Sachs successful?

Becoming prestigious
Making money
Absolute loyalty to the firm
Personal anonymity

4. What is a rating agency?

Any agency which refuses to take money from corporations for rating their securities.
An agency which assigns credit scores to individuals.
An agency which rates the business practices of corporations.
An agency which publishes its ratings on the reliability of securities.

5. Why was the Glass-Steagall Act of 1933 repealed in 1999?

American banks claimed that it made it hard to compete with European banks, which offered both investment and commercial banking services.
Investment banking was too costly for some companies, which could not manage both investment and commercial banking services.
Investors felt inconvenienced that a single bank could not function as both an investment and a commercial bank.
It was ruled unconstitutional by the supreme court.

6. What were the two biggest assets of the average (not median) US household in 2015?

Real estate and mutual funds
Real estate and corporate equities
Mutual funds and corporate equities
Real estate and pension funds

7. Which best describes the “prudent person” rule?

A new rule for fund managers which is starting to apply to newer regulations.
A law which mandates that investment managers must do what another educated, experienced investment manager might do in a similar circumstance.
A law which limits the amount of risk with which funds managers may invest money
A guideline that individuals should look for funds managers who show prudence.

8. Which of the following is NOT true of mutual funds?

Mutual funds are closed end funds.
They are defined and regulated by the SEC.
You join the fund at 4:00 PM on the day you decide to invest.
Massachusetts Investment Trust was an early model for mutual funds in the US.

Lesson #15 Quiz

1. The difference between dealers and brokers is:

Dealers make, on average, more profits than brokers.
Brokers do not serve as a principal in transactions and dealers do.
Brokers are market makers and dealers are not.
Dealers do not serve as a principal in transactions and brokers do.

2. Stock exchanges did not flourish until the 19th century in the U.S. because:

Basic information technology was not yet available.
The cost of creating such an exchange was perceived to be too high.
There was no demand for such a stock exchange.
The number of potentially listed companies was too small.

3. Consider a hypothetical NASDAQ level II screen for the shares of a corporation. Suppose the displayed ask is $20.05 for 100 shares and the displayed bid is $20 for 150 shares. What happens if another dealer places a limit order to buy 50 shares for $20.02?

There will be a transaction of 50 shares at $20.
There will be a transaction of 100 shares at $20.05.
There will be a transaction of 50 shares at $20.05.
No transaction will occur.

4. Investment firms which specialize in high frequency trading try to locate their servers close to the exchanges where they execute their transactions because they want to:

Take advantage of the maintenance services provided by the exchanges if any of their servers fails.
Minimize the time to transmit orders to the exchange.
Benefit from the highest possible demand for trades.
Receive price discounts on transactions from exchanges that come with co-location.

5. A payment for order flow is:

Equal to the bid-ask spread.
A transaction cost which is only associated with stop-loss orders.
A transaction cost which is only associated with limit orders.
The compensation and benefit a brokerage receives by directing orders to different parties to be executed.

Lesson #16 Quiz

1. Some of Carmen Reinhart’s historical findings on sovereign defaults include: (check all that apply)

Governments who cannot repay their creditors often tend to repudiate their sovereign debt contracts.
Sovereign defaults historically tend to occur in waves.
It is common for governments to solve their debt problems by inflating their currencies.
Governments have rarely repudiated their sovereign debt contracts

2. Which of the following are justifications given for the existence of a corporate profits tax? (check all that apply)

Governments may be forced to bail companies out or assist companies during bankruptcy proceedings, as exemplified by General Motors in the aftermath of the financial crisis from 2007-2008.
Governments may have to step in for environmental damages beyond the limited liability of the company that has caused the damages, as exemplified by TEPCO in Japan following the earthquake from 2011.
Corporations participate, through the existence of a corporate profits tax, to the investment and maintenance of public infrastructures.
A specific share of nationalized companies in the profit-sector is a necessary ingredient for an efficient antitrust law.

3. How do local governments typically make use of the money generated by municipal bond issues?

Municipalities use the money to finance public works projects.
Municipalities use the money to finance purchase of equipment such as fire trucks.
Municipalities use the money to finance the salaries of public works employees.
Municipalities use the money to finance local events.

4. The social insurance system in the U.S. is commonly referred to as the OASDI. What kinds of insurance does this abbreviation encompass? (check all that apply)