Methods of obtaining funds Flashcards
True or false. Equity instrument is a tool that an individual, government entity, or business entity can utilize for the purpose of obtaining funds.
False. Debt instrument.
True or false. Debt instrument is a documented. binding obligation that provides funds to an entity in return for a promise from the entity to repay a lender or investor in accordance with the terms of a contract.
True
True or false. Equity instrument is a contract that includes detailed provisions on the deal such as collateral involved, the rate of interest, the schedule of payments for interest and principal and the date of maturity which can be short term, intermediate term, and long term
false. debt instrument
True or false. Equity instrument is a document which serves as a legally applicable evidence of the ownership right in a firm, like a share certificate
True
True or false. Debt instruments are issued to company shareholders and are used to fund the business and where shareholders are entitled to a proportionate share in the net earnings and assets of the company
False. Equity instrument
True or false. Primary markets are the markets in which the users of funds raise funds by issuing financial instruments
true
True or false. Secondary markets are where the new stocks and bonds are sold for the first time through an initial public offering or through an investment bank
false. primary market
True or false. Secondary markets are the markets where financial instruments that have been sold previously are traded among investors
true
True or false. the broad segments of the stock market or exchange are the organized stock exchange and the over-the-counter exchange
true
True or false. organized stock exchange is the organized primary market with a physical location where trading takes place
false. it’s an organized secondary market
True or false. Stock exchange is a facility where stockholders and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments
True
True or false. Listing refers to the admission of securities of a company to trading on a stock exchange and it provides an exclusive privilege to securities on the stock exchange
true
True or false. Only listed shares are quoted on the stock exchange
true
True or false. Money exchange provides transparency in transactions of lister securities and equality and competitive conditions
false. stock exchange
True or false. The decentralized market in which market participants trade stocks, commodities, currencies or other instruments directly between 2 parties and without a central exchange is the over-the-counter exchange
true
True or false. Over-the-counter markets do not have physical conditions
true
True or false. Day trading is where the speculation in securities, specifically buying and selling financial instruments within the same trading day, such that all positions are closed before the market closes for the trading day
true
True or false. traders in day trading who trade in this capacity with motive of profit are therefore speculators
True
True or false. In day trading, shares are held momentarily, buying at one price and selling when the price rises even by a few cents after some minutes later
true
true or false. Profits are gained by trading small volume of shares in one transaction or making several trades during the day
false. large volume
True or false. In day trading, trades are not close out at the end of the day to guard from off-hours movements
false. they are close out
True or false. Good news or bad news provide enormous volatility in a stock and therefore the greatest chance for quick profits or losses
true
True or false. The trend trading is a strategy according to which one should buy an asset when its price trend goes up and sell when its trend goes down, expecting price movements to continue
true
True or false. Range trading refers to an investment strategy that is characterized by purchasing and selling in contrast to the prevailing sentiment of the time
False. contrarian investing
True or false. In contrarian investing, it assumes that financial instruments that have been rising steadily will reverse and start to fall and vice versal
ture
True or false. Contrarian investing is a related approach to range trading in looking for moves outside of an established range called a breakout or price moves up or a breakdown when price goes down and assumes that once the range has been broken, prices will continue in that direction for some time
false. range trading
True or false. Swing trading strategy in financial markets where a tradable asset is held for between one and several days in an effort to profit from price changes or swings
True
True or false. A day trading position is held longer than a swing trading position but shorter than buy and hold investment strategies that can held for months or years
false. Swing trading position is held longer than a day trading position but shorter than a buy and hold investment strategies
True or false. Scalping refers to the shortest time frame in trading and it exploits small changes in currency prices
true
True or false. In scalping, it normally involves establishing and liquidating a position quickly, usually within minutes or even seconds
true
True or false. Bid offer spread is simply the difference between the price at which you can buy a share and the price at which you can sell it
true
True or false. In order to spread, buy at bid price and sell at ask price, in order to gain the bid or ask difference
TRUE
True or false. The ask price is what buyers are willing to pay for
false. bid price
True or false. The ask price is what buyers are willing to take for it
false. ask price is what sellers are willing to take for it
True or false. In margin trading, the buying of securities with cash borrowed from a broker, using the bought securities as collateral
true
