Coursera | Financial Markets

Lesson #11 Quiz >> Financial Markets

Lesson #11 Quiz >> Financial Markets

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1. Why might companies like the idea of regulation?

  •  which they do not have to use (potentially unethical or unfair) special tricks to avoid letting their competitors gain a competitive advantage.Regulation could be used to give them a legal monopoly over a particular sector.
  • Companies have enough money to bribe government officials to create regulation that favors them.
  • It helps them ensure they are representing the interests of their customers.
  • It allows them to compete on a level at which they do not have to use (potentially unethical or unfair) special tricks to avoid letting their competitors gain a competitive advantage.

2. What is tunneling?

  • When management of a company transfers cash from a corporate account to a personal account.
  • Any trick that somebody in the company uses to steal money from the company.
  • When a member of the board of directors fires a high ranking employee so that a family member can take their place.
  • When a small group of majority shareholders in a company allow the company to be bought out for a very low price by another company in which the small group are also majority shareholders.

3. Ideally, who must the board of directors be loyal to?

  • The government
  • The shareholders
  • The general public
  • The CEO

4. What is a fixed commission?

  • Fixed taxes imposed on brokerages if they wished to operate in the stock market.
  • A fixed rate charged by all brokerages to buy or sell shares on the stock market.
  • The rate charged in order to join a trade groups.
  • The opposite of dividends, i.e. fixed per-share prices charged by companies to shareholders.

5. Which of the following describes the contrast of federal vs state regulation in the US?

  • Securities are primarily regulated by federal government but corporate regulation is primarily by the state governments.
  • Securities regulation and corporate regulation are both primarily controlled by the federal government.
  • Securities are primarily regulated by state governments but corporate regulation is primarily by the federal government.
  • Securities regulation and corporate regulation are both primarily controlled by the state governments.

6. What is the US Securities and Exchange Commission (SEC) NOT responsible for doing?

  • To manage the EDGAR database.
  • To authorize companies to be traded publicly on the stock market.
  • To force organizations to maintain financial transparency.
  • To provide reliable and timely information on the performance of securities.

7. Which of the following is NOT an example of insider trading?

  • Mohammed is a secretary for a large corporation and overhears that they are about to take over a smaller corporation. He tells his wife, who purchases a large number of shares in the company immediately before the acquisition is announced.
  • Martha receives private information about a company from her stock broker. As a result, she sells all of her shares in this company, which fall substantially in price the next day.
  • Leah is a short sells shares for a company she used to work for and then creates a fake press release with bad news from the company.
  • Chenxiang, the CEO of a company, directs the purchase and company-wide deployment of software written by his brother.

8. What happened when Goodbody and Company failed?

  • None of the retail investors lost any money.
  • Goodbody and Company had to mail everybody their stocks before they failed.
  • Because Goodbody and Company held the shares for their clients, people lost most or all of their stocks.
  • People began to distrust brokerages and pulled their money out of stocks.

9. Which of the following describes the Bank for International Settlements (BIS)?

  • A bank for citizens of any country which allows them to deal in other currencies.
  • A former financial institution which was replaced by the G20.
  • The English name for the national bank of Switzerland, which strategically fosters relationships between banks internationally.
  • A bank for central banks which provides an intermediary for the central banks to deal with each other.

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