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OUESTIONS
1. Classify the following transactionsas taking place in the primary or secondarymarkets:(LG 1-l) a. IBM issues$200 million of new common stock. b. The New Companyissues $50 million of common stock in an IPO. c. IBM sells $5 million of GM preferred stock out of its marketablesecuritiesportfolio. d. The Magellan Fund buys $100 million of previously issuedIBM bonds. e. PrudentialInsuranceCo. sells $10 million of GM common stock. Classify the foliowing financial instrumentsas money market securitiesor capital market securities:(LG I-2) a. Banker's acceptances b. Commercial paper c. Common stock d. Corporatebonds e. Mortgages f. Negotiable certificates of deposit g. Repurchaseagreements h. U.S. Treasury bills i. U.S. Tieasury notes j. Federal funds 8. What are the different types of financial institutions? Include a description of the main servicesoffered by each. (LG I-s) 9. How would economic transactionsbetweensuppliersof funds (e.g.,households) occur andusersof funds (e.g.,corporations) in a world without Fls? (LG I-6)
12. How do FIs alleviate the problem of tiquidity and price risk
faced by investorswishing to invest in securitiesof corporations?(LG 1-6)
3. How does the location of the money market differ from that
of the capital market? (LG I-2)
', I Go,tg the New YonkStock ExchangeWeb site at www.nyse.com and find the latest figunesfor- top NYSEvolumedays. '''''Cfick on'flnvestorRelations." Clickon "Financials." Clickon "Data Clickon "Transaction,/Statistics." "NYSE "NYSE Clickon StatisticsArchive."Under DailyShaneVolumein NYSEListed lssues," Librany." " Click on "Market Activity."Clickon "NYSE click on the most recent date. Clickon "lnteractiveViewen data. GroupVolumeRecords-Top 1O Days."This bnings up a file that containsthe nelevant Buestionsi 1. What is the largestnumbenof dailyshanes On what day did this occun? traded on the NYSE? the pencentage changein dailytradingvolumesince the 2.4 billionshanestraded on 2. Calculate June 1 B, 2O1O.