Reference no: EM132833970
Problem 1: Which of the following statements is correct?
a. An IPO is an example of a primary market transaction.
b. Money markets are subject to wider price fluctuations and are therefore more risky than capital market instruments.
c. A direct transfer of funds is more efficient than using financial institutions.
d. The market segmentation theory argues that different investors have different risk preferences, which determine the shape of the yield curve.
Problem 2: Which of the following transactions in not a secondary market transaction?
a. GE sells 30 million dollars of new preferred stock.
b. Microsoft sells 2 million dollars of IBM preferred stock out of its marketable securities portfolio.
c. The Magellan Fund buys 100 million dollars of Apple previously issued bonds.
d. Allstate Insurance Company. Sells 5 million dollars in IBM bonds.