1. The sell side is composed of: a. Mutual funds b. Hedge funds c. Pension funds d. Online Brokers e. All of the above f. Only a. and b. g. Only a., b., and c.

2 In the US, the SEC regulates trading in: a. Stocks b. Stocks and Treasury bonds c. Stocks and corporate bonds d. Stocks and S&P 500 futures e. Stocks, Treasury, and corporate bonds f. Stocks, Treasury, corporate bonds, and S&P 500 futures

3. In the US, FINRA is: a. A stock exchange. b. A dark pool. c. A non-profit corporation that regulates aspects of trading and broker/customer interactions. d. None of the above

4. In securities markets, exchanges are: a. Forums where traders can arrange trades. b. Providers of financial information. c. Non-profit corporations. d. None of the above. e. Only a. and b. f. Only a. and c.

5. In recent years: a. Stock exchanges have merged and consolidated. b. Stock exchanges have become multinational corporations. c. Most stock exchanges are still member-owned cooperatives. d. All of the above e. Only a. and b. f. Only a. and c.

6. Limited-liability means: a. The fact that a firm cannot borrow more than a certain amount. b. The fact that shareholders can lose at most their investment in the firm. c. The fact that shareholders might lose a certain fraction of their assets if the firm goes bankrupt. d. All of the above. e. Only a. and b. f. Only a. and c.

7. According to Roth (1995), in ultimatum games face-to-face proposals are rejected _____ than anonymous proposals. a. More often. b. Less often. c. As often.

8. According to the study by Andersen, Ertac, Gneezy, Hoffman & List (2011) on ultimatum games in poor villages in Northeast India: a. The average share offered increases as the stakes increase. b. The total rejection rate decreases as the stakes increase. c. The rejection rate for unfair offers decreases as the stakes increase. d. Only b. and c. e. Only a., b. and c. f. None of the above.

9. According to Roth (1995), in ultimatum games anonymous proposals are rejected _____ than face-to-face proposals. a. More often. b. Less often. c. As often.

10. in ultimatum games, the rational (i.e. optimal) strategy for the respondent is: a. Only accept high offers, but reject low ones. b. Only accept fair offers, but reject unfair ones. c. Accept any offer no matter how low it is as long as it pays something. d. There is no rational strategy.

11. What is true about Liquinet? a. It’s an ATS for US stocks open to retail investors. b. It’s an ATS for US stocks open to institutions. c. Buyers and sellers can bargain over price. d. All of the above. e. Only a. and b. f. Only b. and c.

12. According to Rubinstein (1982): a. If agents are allowed to counter-offer, the game will immediately converge to a fair split income. b. Delay is costly, and bargaining over unfair proposals wastes people’s time. c. If agents are allowed to counter-offer, then it’s very hard to reach an agreement. d. All of the above. e. Only a. and b. f. Only a. and c.

13. In ultimatum games, the rational (i.e. optimal) strategy for the proposer is: a. Offer as much as possible to the respondent. b. Offer as little as possible to the respondent. c. Split the offer 50/50. d. There is no rational strategy.

14. You are about to participate in a private value auction. There will be a total of 10 rational participants in the auction. You have been informed by a higher being that, of the 10 participants, you have the highest private valuation. In which type of auction you are the most likely to win the auction? a. In a Dutch auction. b. In a 1st price, sealed bid auction. c. In a 2nd price, sealed bid auction. d. It depends on the value of the object. e. It cannot be determined.

15. Consider a first-price auction with common values and two rational bidders with uniformly distributed signals S1 and S2. The true value of the object being auctioned is given by V = (S1 + S2)/2. If S1 = 80 and S2 = 20, then: a. The value of the asset is $80. b. Bidder 1 should bid $40. c. Bidder 2 should bid $20. d. All of the above. e. Only a. and b. f. Only a. and c.

16. What is true about common value auctions? a. With common values, the English and second-price auctions are strategically equivalent. b. With common values, the Dutch and first-price auctions are strategically equivalent. c. Security markets are dominated by common values. d. All of the above. e. Only a. and c. f. Only b. and c.

17. You are about to participate in a private value auction. There will be a total of 30 rational participants in the auction. You have been informed by a higher being that, of the 30 participants, you have the second highest private valuation. This implies that one of the other 29 participants has a higher private value. In which type of auction you are the least likely to win the auction? a. In an English auction. b. In a Dutch auction. c. In a 1st price, sealed bid auction. d. It depends on the value of the object. e. It cannot be determined

18. Consider a first-price auction with common values and two rational bidders with uniformly distributed signals S1 and S2. The true value of the object being auctioned is given by V = (S1 + S2)/2. a. Both bidders should bid their signals. b. If we do a million of such auctions, the average auction price will be close to V. c. If V is known, then the object should sell for V. d. All of the above. e. Only a. and b. f. Only a. and c.

19. With common values, the English and second-price sealed-bid auctions are strategically equivalent. a. True. b. False. c. It depends on the type of object.

20. You are about to participate in a private value auction. There will be a total of 30 rational participants in the auction. You have been informed by a higher being that, of the 30 participants, you have the second highest private valuation. This implies that one of the other 29 participants has a higher private value. In which type of auction you are the least likely to win the auction? a. In a Dutch auction. b. In a 1st price, sealed bid auction. c. In a 2nd price, sealed bid auction. d. It depends on the value of the object. e. It cannot be determined.

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The detailed answer for the above question is provided below 1 e All of the above 2 f Stocks Treasury corporate bonds and SP 500 futures 3 c A nonprofit corporation that regulates aspects of trading a... View the full answer