Answer to Question #5858 in Finance for LaMarcus Streeter

Question

Financial Management (Explain how answer was reached)

3. Which of the following statements is CORRECT?

a. If General Electric were to issue new stock this year it would be considered a secondary market transaction since the company already has stock outstanding.

b. Capital market transactions only include preferred stock and common stock transactions.

c. The distinguishing feature between spot markets versus futures markets transactions is the maturity of the investments. That is, spot market transactions involve securities that have maturities of less than one year, whereas futures markets transactions involve securities with maturities greater than one year.

d. Both Nasdaq "dealers" and NYSE “specialists” hold inventories of stocks.

e. An electronic communications network (ECN) is a physical location exchange.

Answer 1

a. It is a secondary market.
b. Capital market transactions include more
transactions.
c.1. A commodities or securities market in which goods are sold
for cash and delivered immediately. Contracts bought and sold on these markets
are immediately effective.

2. A futures transaction for which commodities
can be reasonably expected to be delivered in one month or less. Though these
goods may be bought and sold at spot prices, the goods in question are traded on
a forward physical market.
d. Both Nasdaq "dealers" and NYSE "specialists"
hold inventories of stocks - IT IS TRUE
e. An electronic communications
network (ECN) is not physical location exchange.