Market Stabilization

question 54

Multiple Choice

Market stabilization:

• A) is the action by the managing investment dealer to keep the price of newly issued securities from rising quickly.
• B) usually lasts 3-6 days but can last up to 60 days if a security is difficult to distribute.
• C) can always keep prices of securities from falling.
• D) is accomplished by repurchasing securities as the market price moves below the initial public offering price.

---

Definitions:

Political Risk

The risk associated with changes in government policy which may negatively affect domestic and foreign businesses.

Disadvantage

This refers to an unfavorable condition or circumstance that reduces the chances of success or effectiveness.

Hedge

Investment made to reduce the risk of adverse price movements in an asset, often by taking an offsetting position in a related security.

Spot Rates

The current price in the marketplace at which a particular asset can be bought or sold for immediate delivery.