Which of the following statements is true about broker markets? Group of answer choices Brokers bring buyers and sellers together to earn a margin, called a bid-ask spread. Brokers’ extensive contacts provide them with a pool of price information that individual investors could easily duplicate themselves, and hence not really value adding. Brokers cannot guarantee an order because they have no inventory of securities. Investors have no incentive to hire a broker because what they charge as a commission is more than the cost of direct search.

Which of the following statements is true about broker markets? Group of answer choices Brokers bring buyers and sellers together to earn a margin, called a bid-ask spread. Brokers’ extensive contacts provide them with a pool of price information that individual investors could easily duplicate themselves, and hence not really value adding. Brokers cannot guarantee an order because they have no inventory of securities. Investors have no incentive to hire a broker because what they charge as a commission is more than the cost of direct search.

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter14: Investing In Stocks And Bonds

Section14.4: Buying And Selling Stocks

Problem 3CC

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A broker tells you that he has continuously outperformed the market by trading on publicly available information in the UK market. According to the Efficient Market Hypothesis, what would this imply? The market is weak form efficient. The market is semi-strong form efficient. The market is strong form efficient. The market is not efficient.
An investment banker most commonly makes money from Group of answer choices A. commissions from buyers. B. artificially supporting the stock price during and after the offering. C. fees from other investment bankers in the syndicate. D. the spread between the issue price and proceeds to the issuer.
A broker tells you that he has continuously outperformed the market by trading on publicly available information in the Hong Kong market. According to the Efficient Market Hypothesis, what would this imply? A) The market is weak form efficient. B) The market is semi-strong form efficient. C) The market is strong form efficient. D) The market is not efficient.
Which of the following(s) is (are) the characterization of dealer market? It improved market efficiency because dealers provide continuous bid and ask prices for securities. The dealer does not hold an inventory of securities. The presence a dealer market does not affect market efficiency because search costs are still high. It is time-consuming to search for a fair deal.
Which of the following statements is true about dealer markets? NYSE is the best-known example of a dealer market. A dealer market involves time-consuming search for a fair deal. The advantage of a dealer over a brokered market is that brokers cannot guarantee that an order will be executed promptly, while dealers can, because they have an inventory of securities. All of the above are true of dealer markets.
The efficient market hypothesis says that Multiple Choice market prices reflect underlying asset values. individual investors should not participate in the financial markets. investors should expect to earn abnormal profits. financial managers can accurately time stock and bond sales. creative accounting can be used to inflate stock prices.
The weak form of the efficient market hypothesis implies that: CHOOSE ONE A. Investors can achieve abnormal returns, on average, using technical analysis, after adjusting for transaction costs and taxes. B. Insiders, such as specialists and corporate board members, cannot achieve abnormal returns on average. C. No one can achieve abnormal returns using market information. D. NONE OF THE ABOVE
Which is the type of Brokerage firm that allow investors to perform their own investment research and make their own decisions? a. Full service brokerage b. Discount Brokerage c. All the options are wrong d. No Brokerage
You are a market-maker working at a large broker-dealer in the FX spot market. You are responsible for making a market in the AUD vs. the USD. Suppose a customer sells you an abnormally large quantity of AUD. How would you adjust your quotes to attract offsetting order-flow to decrease your net position in this market? Answer with respect to bids and asks for the spot rate that is directly quoting for AUD. You would decrease both your bid price and your ask price for S(USD/AUD). O You would decrease your bid price and increase your ask price for S(USD/AUD). You would increase your bid price and decrease your ask price for S(USD/AUD). You would increase both your bid price and your ask price for S(USD/AUD). O None of the other answers.
Assume that the efficient market hypothesis holds.Marcos has been recently hired by a brokerage firm andclaims that he now has access to the best market information. However, he is the “new guy,” and no one atthe firm tells him much about the business. Would youexpect Marcos’s clients to be better or worse off thanthe rest of the firm’s clients?
Mark thinks that there is an interesting paradox of the efficient market hypothesis. If the market believes that prices reflect all information, investors will stop seeking mispriced securities. This may lead to more mispriced stocks and more inefficiency. However, if the market believes that inefficiency still exists, the competition of trying to be the first to find mispriced securities will make markets more efficient. Do you agree with Mark? Why or why not? Please briefly comment.
Markets tend to be efficlent when Multiple Choice arbitrage is unlawful. amateurs dominate the market. all investors are required to be rational. professional arbitrage exceeds amateur speculation, prices adjust to new information slowly.