Question : The process of buying and selling securities on the same day is known as:
Option 1: Arbitrage
Option 2: Short selling
Option 3: Dividend reinvestment
Option 4: Options trading
Correct Answer: Arbitrage
Solution : The correct answer is (a) Arbitrage.
The process of buying and selling securities on the same day is known as arbitrage. Arbitrage is a trading strategy where traders take advantage of price discrepancies between different markets or securities to make a profit with minimal risk. Arbitrage seeks to exploit temporary inefficiencies in the market, aiming to generate profit from the price discrepancies that may occur due to factors such as market inefficiencies, differences in supply and demand, or delays in information dissemination.
Question : Open market operations refer to the:
Option 1: Buying and selling of government securities by the central bank
Option 2: Buying and selling of goods and services in the international market
Option 3: Buying and selling of stocks and bonds in the financial market
Option 4: Buying and selling of foreign currencies in the foreign exchange market
Question : What is the primary role of an underwriter in the capital market?
Option 1: Buying and selling securities on behalf of investors
Option 2: Facilitating the trading of government bonds
Option 3: Assisting companies in issuing securities
Option 4: Regulating the stock exchanges
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