Which of the Following Statements Is CORRECT

question 10

Multiple Choice

Which of the following statements is CORRECT?

• A) The New York Stock Exchange is an auction market with a physical location.
• B) Capital market transactions involve only the purchase and sale of
• Equity securities, i.e., common stocks.
• C) If an investor sells shares of stock through a broker, then this
• Would be a primary market transaction.
• D) Consumer automobile loans are evidenced by legal documents called "promissory notes," and these individual notes are traded in the
• Money market.
• E) While the distinctions are blurring as investment banks are today buying commercial banks, and vice versa, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties.

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Definitions:

Natural Monopoly

A market condition in which a single firm can provide a product or service at a lower cost than any potential competitors, often due to economies of scale.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of the operation increases.

Exclusive Franchise

A business arrangement granting a single entity the right to market a company's goods or services within a specified territory.

Deregulation

The process of reducing or eliminating government controls or restrictions on industries to promote efficiency and competition.