4-46 in Market-Making

question 51

Multiple Choice

4-46 In market-making

• A)principal transactions are two-way transactions on behalf of customers,such as a dealer working for a fee or commission.
• B)principal transactions are when market makers take long or short positions and seek profits on price movements.
• C)market makers take inventory positions to stabilize the market in the securities.
• D)Answers A and C only.
• E)Answers B and C only.

Analyze different payment options and their financial implications using present value and future value concepts.

Determine the accounting rate of return and its application in evaluating investments.

Apply the payback method in evaluating the profitability and risk of investments.

Use real-options analysis and other scenario-based methods in capital budgeting.

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Definitions:

Stagflation

A contraction, or stagnation, of a nation’s output accompanied by inflation in the price level.

Aggregate Demand

The sum of the need for all products and services in an economy at a certain price level during a specific time frame.

Unemployment

The condition of someone of working age who is willing to work, but unable to find employment.

Supply-Side Economics

An economic theory that advocates reducing taxes and regulations to stimulate production and economic growth.