- Question 1:
- Proficient-level: "Classify the following transactions as taking place in the primary or secondary markets:
- IBM issues $200 million of new common stock.
- The New Company issues $50 million of common stock in an IPO.
- IBM sells $5 million of GM preferred stock from its marketable securities portfolio.
- The Magellan Fund buys $100 million of previously issued IBM bonds.
- Prudential Insurance Co. sells $10 million of GM common stock" (Cornett, Adair, & Nofsinger, 2016, p. 154).
- Distinguished-level: Provide five correct responses.
- Question 2:
- Proficient-level: "Classify the following financial instruments as money market securities or capital market securities:
- Federal Funds.
- Common Stock.
- Corporate Bonds.
- Negotiable Certificates of Deposit.
- U.S. Treasury Bills.
- U.S. Treasury Notes.
- U.S. Treasury Bonds.
- State and Government Bonds" (Cornett, Adair, & Nofsinger, 2016, p. 154).
- Distinguished-level: Provide nine correct responses.
- Question 3:
- Proficient-level: "What are the different types of financial institutions? Include a description of the main services offered by each" (Cornett, Adair, & Nofsinger, 2016, p. 154).
- Distinguished-level: Provide a definition of the term, liquidity.
- Question 4:
- Proficient-level: "List and provide the definitions of the six factors that determine the nominal interest rate on a security" (Cornett, Adair, & Nofsinger, 2016, p. 154).
- Distinguished-level: Identify the two factors common to all financial securities.
- Question 5:
- Proficient-level: Define the concept, term structure of interest rates. List and describe the three theories explaining the shape of the term structure of interest rates.
- Distinguished-level: Identify the slope of the most common yield curve for a U.S. Treasury security.
Question#1: IBM issuing $200 million of new common stock is an example of a transaction in the Primary Market.
Question#2:Federal Funds is financial instrument classified as a Money Market security.
Question#3:Make sure you respond to each of the 7 different types of financial institutions reviewed in Table 6.3 of the M: Finance text.
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