Question 1

A stop order is similar to a limit order,except that once the set price is reached,the stop order

Accepted Answer

A) is executed after all limit orders at the same price. 
B) becomes a limit order. 
C) goes to the end of the execution cue. 
D) immediately becomes a market order. 
A) is executed after all limit orders at the same price. 
B) becomes a limit order. 
C) goes to the end of the execution cue. 
D) immediately becomes a market order. D

Question 2

For investors putting their funds in tax-deferred accounts,the capital gains tax provisions during the holding period are irrelevant.

Accepted Answer

A) True 
 B)False  True

Question 3

Novice investors should consider using full-service brokers.

Accepted Answer

A) True 
 B)False  True

Question 4

The following are all value-weighted indexes,except:

Accepted Answer

A) the S&P 500. 
B) the Dow Jones Industrial Average. 
C) midcap 400. 
D) the S&P Industrials (400 stocks). 
E) wilshire 5000. 
A) the S&P 500. 
B) the Dow Jones Industrial Average. 
C) midcap 400. 
D) the S&P Industrials (400 stocks). 
E) wilshire 5000.

Question 5

An investor who is in a 33% tax bracket for normal (ordinary)income buys a stock for $5,000 and sells it for $9,000.How much will her tax obligation be if she holds the stock for:
(a)6 months?
(b)14 months?

Accepted Answer

The answer of An investor who is in a 33%...

Question 6

The success of a short investment position depends on:

Accepted Answer

A) a level stock price. 
B) a declining stock price. 
C) an increasing stock price. 
D) declining interest rates. 
E) More than one of the above 
A) a level stock price. 
B) a declining stock price. 
C) an increasing stock price. 
D) declining interest rates. 
E) More than one of the above

Question 7

The margin requirement on stock is currently 30%.

Accepted Answer

A) True 
 B)False

Question 8

Long-term capital gains treatment serves as encouragement for investors to buy:

Accepted Answer

A) high-yield stocks. 
B) municipal bonds. 
C) U.S.government bonds. 
D) growth stocks. 
A) high-yield stocks. 
B) municipal bonds. 
C) U.S.government bonds. 
D) growth stocks.

Question 9

The Dow Jones Industrial Average is a value-weighted index.

Accepted Answer

A) True 
 B)False

Question 10

You buy 100 shares of stock at $50 per share on margin of 40 percent.If the price of the stock declines to $35,what is your percentage loss?

Accepted Answer

The answer of You buy 100 shares of stock at...

Question 11

All of the S&P measures are true indexes,in that they are linked to a base value.

Accepted Answer

A) True 
 B)False

Question 12

The NYSE sets margin requirements.

Accepted Answer

A) True 
 B)False

Question 13

The tax rate that is simply the amount of taxes paid,divided by taxable income is:

Accepted Answer

A) the marginal tax rate. 
B) the average tax rate. 
C) the short-term capital gains tax rate. 
D) the long-term capital gains tax rate. 
A) the marginal tax rate. 
B) the average tax rate. 
C) the short-term capital gains tax rate. 
D) the long-term capital gains tax rate.

Question 14

A value-weighted index tends to give more importance to large companies than small companies.

Accepted Answer

A) True 
 B)False

Question 15

Using the Table below,assume a single person has a taxable income of $40,000. $$\begin{array}{l}
 \underline {\text { Taxable Income }}& \underline { \text { Tax Rate } }\
0-\$ 7,300 & 10 \% \
\$ 7,300-\$ 29,700 & 15 \% \
\$ 29,700-\$ 40,000 & 25 \%
\end{array}$$ (a)How much tax will be owed? (You will need to refer to the Table plus make your own calculations).
(b)What is the person's average tax rate?
(c)What is the person's marginal tax rate?

Accepted Answer

(a)$6,665

Question 16

Which of the following is NOT a characteristic of the Wilshire 5000 Equity Index?

Accepted Answer

A) It is most frequently used by individual investors 
B) It represents the total dollar value of 5,000 stocks on a value-weighted basis 
C) It contains all NYSE and AMEX issues,and most active NASDAQ issues 
D) It is used as a measure of the broadest market performance index 
E) It is a value-weighted index 
A) It is most frequently used by individual investors 
B) It represents the total dollar value of 5,000 stocks on a value-weighted basis 
C) It contains all NYSE and AMEX issues,and most active NASDAQ issues 
D) It is used as a measure of the broadest market performance index 
E) It is a value-weighted index

Question 17

If you short a stock and the price goes up,your net equity value will go up.

Accepted Answer

A) True 
 B)False

Question 18

A __________ order sets the price at which an investor is willing to buy or sell and assures the investor that he/she will pay no more or receive no less than the agreed-upon price.

Accepted Answer

A) limit 
B) stop 
C) good 'til canceled 
D) market 
A) limit 
B) stop 
C) good 'til canceled 
D) market

Question 19

Online brokers have become popular because:

Accepted Answer

A) they offer discounts on stock research reports. 
B) their commissions are lower than full-service or discount brokers. 
C) they specialize in the stock of low priced securities. 
D) only online brokers can service self-directed individual retirement accounts. 
A) they offer discounts on stock research reports. 
B) their commissions are lower than full-service or discount brokers. 
C) they specialize in the stock of low priced securities. 
D) only online brokers can service self-directed individual retirement accounts.

Question 20

A margin represents the amount of money an investor may borrow to purchase securities.

Accepted Answer

A) True 
 B)False

Exam 3: Participating in the Market

A stop order is similar to a limit order,except that once the set price is reached,the stop order

For investors putting their funds in tax-deferred accounts,the capital gains tax provisions during the holding period are irrelevant.

Novice investors should consider using full-service brokers.

The following are all value-weighted indexes,except:

An investor who is in a 33% tax bracket for normal (ordinary)income buys a stock for $5,000 and sells it for $9,000.How much will her tax obligation be if she holds the stock for: (a)6 months? (b)14 months?

The success of a short investment position depends on:

The margin requirement on stock is currently 30%.

Long-term capital gains treatment serves as encouragement for investors to buy:

The Dow Jones Industrial Average is a value-weighted index.

You buy 100 shares of stock at $50 per share on margin of 40 percent.If the price of the stock declines to $35,what is your percentage loss?

All of the S&P measures are true indexes,in that they are linked to a base value.

The NYSE sets margin requirements.

The tax rate that is simply the amount of taxes paid,divided by taxable income is:

A value-weighted index tends to give more importance to large companies than small companies.

Which of the following is NOT a characteristic of the Wilshire 5000 Equity Index?

If you short a stock and the price goes up,your net equity value will go up.

A __________ order sets the price at which an investor is willing to buy or sell and assures the investor that he/she will pay no more or receive no less than the agreed-upon price.

Online brokers have become popular because:

A margin represents the amount of money an investor may borrow to purchase securities.

The Investment Setting

Security Markets

Investment Companies: Mutual Funds, exchange-Traded Funds, closed-End Funds, and Unit Investment Trusts

Economic Activity

Industry Analysis

Financial Statement Analysis

Efficient Markets and Anomalies

Behavioral Finance and Technical Analysis

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

International Securities Markets

Investments in Real Assets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

a Comprehensive Analysis for Real Estate Investment Decisions

the Makeup of Institutional Investors

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