21) The vast majority of corporate bond business takes place over the counter.
22) Financial markets exist in order to allocate savings in the economy to the demanders of those savings.
23) A seasoned equity offering is the sale of additional shares by a company whose shares are already publicly traded.
24) Primary market transactions cannot be undertaken in over the counter markets.
25) Financial intermediaries issue their own indirect securities and use the proceeds to purchase the direct securities of other economic units.
26) Cash markets are often referred to as spot markets.
27) Which of the following statements is an example of a futures market transaction? A) An investor purchases 100 shares of IBM hoping to sell it in two years for a profit B) A company purchases an option to buy 1000 barrels of oil anytime between now and the end of the year. C) A company agrees to purchase 1000 barrels of oil for delivery in six months at a price of $70 per barrel. D) An executive has a portion of his current year salary deferred until he retires.
28) General Electric (GE) has been a public company for many years with its common stock traded on the New York Stock Exchange. If GE decides to sell 500,000 shares of new common stock, the transaction will be describe as A) an initial public offering. B) a secondary market transaction because GE common stock has been trading for years. C) a seasoned equity offering because GE has sold common stock before. D) a money market transaction because GE raises new money to fund its business.
29) Money market instruments include A) common stock. B) preferred stock. C) T-bonds. D) T-bills.
30) ExxonMobil generates about $50 billion in cash annually from its operations and invests about half of that on new exploration. Therefore, ExxonMobil is an example of a(n) A) savings surplus unit. B) savings deficit unit. C) investment banker. D) financial intermediary.