Which of the Following Statements Is CORRECT

question 33

Multiple Choice

Which of the following statements is CORRECT?

• A) The NYSE does not exist as a physical location. Rather it represents a loose collection of dealers who trade stock electronically.
• B) An example of a primary market transaction would be your uncle transferring 100 shares of Wal-Mart stock to you as a birthday gift.
• C) Capital market instruments include both long-term debt and common stocks.
• D) If your uncle in New York sold 100 shares of Microsoft through his broker to an investor in Los Angeles, this would be a primary market transaction.
• E) While the two frequently perform similar functions, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise large blocks of capital from investors.

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Definitions:

Journal Entries

Records of financial transactions in the double-entry bookkeeping system, showing debits and credits made in accounts to maintain the ledger.

Available-For-Sale Investments

Financial assets not classified as held-to-maturity or trading securities, which can be sold in the financial markets.

Unrealized Gain

The increase in the value of an investment that has not been sold yet, and thus, the gain is not yet realized as actual income.

Adjusting Entry

An accounting transaction recorded at the end of a financial period to adjust account balances in the ledgers.