Trivia Quiz: What Do You Know About Secondary Market?

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  • 1/11 Questions

    One of the major stock exchanges:

    • Philadelphia Stock Exchange
    • NASDAQ
    • Technology Stock Exchange
    • Linked In
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About This Quiz

This Trivia Quiz explores the Secondary Market, focusing on stock trading mechanisms, market makers, and electronic exchanges like NASDAQ. It assesses understanding of market dynamics, roles of brokers, and over-the-counter trading, targeting learners interested in finance and economics.

Trivia Quiz: What Do You Know About Secondary Market? - Quiz

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  • 2. 

    At present, most stock trades are done

    • By visiting the floor of the exchange

    • On the phone

    • Electronically

    • By placing an offer on ebay

    Correct Answer
    A. Electronically
    Explanation
    Currently, the majority of stock trades are conducted electronically. This means that traders can buy and sell stocks using computer systems and electronic networks, without the need to physically visit the trading floor of the exchange or communicate through phone calls. This method allows for faster and more efficient trading, as it eliminates the need for manual processes and enables instant execution of trades.

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  • 3. 

    What is the function of a market maker?

    • Helps companies that are doing IPOs

    • Sells stocks on behalf of clients for a commission

    • Maintains an orderly market by buying or selling stock if their are no other buyers or sellers

    • Ensures that brokers do not defraud their customers

    Correct Answer
    A. Maintains an orderly market by buying or selling stock if their are no other buyers or sellers
    Explanation
    A market maker plays a crucial role in maintaining an orderly market by buying or selling stocks when there are no other buyers or sellers available. This helps to ensure that the market remains liquid and that there is always a counterparty for investors to trade with. By stepping in as a buyer or seller, the market maker helps to provide stability and prevent extreme price fluctuations.

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  • 4. 

    How are stock prices determined in the secondary market?

    • They are set by the corporation's CFO

    • They are set by the corporation's Board of Directors

    • They are set by the SEC

    • Supply and demand

    Correct Answer
    A. Supply and demand
    Explanation
    Stock prices in the secondary market are determined by the forces of supply and demand. When there is a high demand for a particular stock, its price tends to increase. Conversely, when there is a low demand and a higher supply of a stock, its price may decrease. The interaction between buyers and sellers in the market ultimately determines the price at which stocks are traded. The actions and decisions of the corporation's CFO or Board of Directors may influence investor sentiment and affect supply and demand, but they do not directly set the stock prices. Similarly, while the SEC regulates and oversees the stock market, it does not determine individual stock prices.

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  • 5. 

    A financial professional who assists investors in the secondary market by providing access to the exchanges:

    • Broker

    • Market maker

    • Investment banker

    • CFO

    Correct Answer
    A. Broker
    Explanation
    A broker is a financial professional who helps investors in the secondary market by providing them access to the exchanges. They act as intermediaries between buyers and sellers, executing trades on behalf of their clients. Brokers play a crucial role in facilitating the buying and selling of securities, such as stocks, bonds, and commodities. They provide market research, advice, and assistance in executing trades, ensuring that investors have access to the secondary market and can make informed investment decisions.

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  • 6. 

    A stock exchange on which all trades are electronic (there is no physical place where trading takes place):

    • NYSE

    • NASDAQ

    • SEC

    • CFO

    Correct Answer
    A. NASDAQ
    Explanation
    NASDAQ is the correct answer because it is an example of a stock exchange that operates entirely electronically, without a physical trading floor. Unlike NYSE, which has a physical location in New York, NASDAQ is a global electronic marketplace where traders can buy and sell stocks through computer networks. SEC stands for the Securities and Exchange Commission, which is a regulatory body overseeing the securities industry, while CFO stands for Chief Financial Officer, a corporate executive responsible for managing financial operations.

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  • 7. 

    Which exchange lists a large number of technology companies?

    • SEC

    • NYSE

    • NASDAQ

    • DOW

    Correct Answer
    A. NASDAQ
    Explanation
    NASDAQ is the correct answer because it is an exchange that primarily lists technology companies. It is known for being the world's first electronic stock market and has a large number of technology companies listed on its platform. Some of the biggest technology companies, such as Apple, Microsoft, and Amazon, are listed on NASDAQ.

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  • 8. 

    If a corporation is concerned about its ability to meet listing requirements, the best place for its stock to trade is

    • On the NYSE

    • In the over the counter market

    • On the NASDAQ

    • None of the above have listing requirements

    Correct Answer
    A. In the over the counter market
    Explanation
    The best place for a corporation's stock to trade if it is concerned about meeting listing requirements is in the over the counter (OTC) market. Unlike the NYSE and NASDAQ, the OTC market does not have strict listing requirements, making it a more flexible option for the corporation. This allows the corporation to continue trading its stock even if it does not meet the stringent criteria set by the major exchanges.

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  • 9. 

    Listing requirements vary among exchanges, but, in general, listing requirements do not require a corporation to have

    • A profitable history

    • A large market capitalization

    • A large number of shareholders

    • A history of paying dividends

    Correct Answer
    A. A history of paying dividends
    Explanation
    Exchanges typically do not require a corporation to have a history of paying dividends in order to be listed. This means that a corporation can still be listed on an exchange even if it has not paid dividends to its shareholders in the past. Listing requirements may vary among exchanges, but generally, profitability, market capitalization, and number of shareholders are more important factors for listing eligibility.

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  • 10. 

    What happens if a stock is not listed?

    • It cannot be publicly traded

    • It can only trade as a NASDAQ stock

    • The stock can be traded "over the counter"

    • It faces a fine imposed by the SEC

    Correct Answer
    A. The stock can be traded "over the counter"
    Explanation
    If a stock is not listed, it can still be traded "over the counter". This means that the stock is not traded on a centralized exchange like the NYSE or NASDAQ, but instead, it is traded directly between buyers and sellers. Over-the-counter trading allows for more flexibility and less regulation compared to trading on a formal exchange.

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  • 11. 

    How many stocks are in the DOW?

    • 3,500

    • 2,000

    • 500

    • 30

    Correct Answer
    A. 30
    Explanation
    There are 30 stocks in the DOW. The DOW, also known as the Dow Jones Industrial Average, is a stock market index that represents the performance of 30 large and well-known companies listed on stock exchanges in the United States. These 30 stocks are carefully selected to provide a snapshot of the overall health and performance of the stock market.

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Quiz Review Timeline (Updated): Aug 26, 2023 +

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  • Current Version
  • Aug 26, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 25, 2017
    Quiz Created by
    Theprof
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