When Investment Banks Buy or Sell Securities on Their Own

question 50

Multiple Choice

When investment banks buy or sell securities on their own account,it's called

• A) financial engineering.
• B) proprietary trading.
• C) underwriting.
• D) factoring.

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Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence future business decisions.

Economic Decisions

Choices made by individuals, firms, or governments regarding the allocation of resources to satisfy needs and wants.

Marginal Decision Maker

is an individual or entity that makes choices based on the additional cost or benefit of the next unit of consumption or production.

Comparative Advantage

The ability of an entity to produce a good or offer a service at a lower opportunity cost than others, leading to more efficient trade.