Question 1

The S&P Indexes are often used by professionals because they are weighted by total market value of the companies in the index.

Accepted Answer

A) True 
 B)False

Question 2

The indexes of The New York Stock Exchange,American Exchange,and NASDAQ are all price-weighted.

Accepted Answer

A) True 
 B)False

Question 3

Stocks may be used to satisfy margin requirements,rather than cash.

Accepted Answer

A) True 
 B)False

Question 4

The Value Line Average contains stocks from several exchanges or markets.

Accepted Answer

A) True 
 B)False

Question 5

The Value Line Average is an equal-weighted index.

Accepted Answer

A) True 
 B)False

Question 6

________________ represents 75% of the total value of firms listed on the NYSE,while ____________________ includes 1,700 individual firms.

Accepted Answer

A) The Dow Jones Industrial Average;Value Line Average 
B) Wilshire 5000;Russell 2000 
C) The Value Line Average;Standard & Poor's Composite 
D) The Dow Jones Composite Average;the Standard & Poor's Industrials 
E) The Standard & Poor's 500 Index;Value Line Average 
A) The Dow Jones Industrial Average;Value Line Average 
B) Wilshire 5000;Russell 2000 
C) The Value Line Average;Standard & Poor's Composite 
D) The Dow Jones Composite Average;the Standard & Poor's Industrials 
E) The Standard & Poor's 500 Index;Value Line Average

Question 7

When an investor establishes a position in a security,

Accepted Answer

A) they are said to be long if they purchase the security for their account. 
B) they are said to be long if they sell the security for their account. 
C) they are said to be short if they sell the security for their account. 
D) they are said to be short if they purchase the security for their account. 
E) Both a and c 
A) they are said to be long if they purchase the security for their account. 
B) they are said to be long if they sell the security for their account. 
C) they are said to be short if they sell the security for their account. 
D) they are said to be short if they purchase the security for their account. 
E) Both a and c

Question 8

If a stock is held for less than 12 months,any gain in value is taxed as ordinary income.

Accepted Answer

A) True 
 B)False

Question 9

You can write off up to $5,000 in investment losses in any one year.

Accepted Answer

A) True 
 B)False

Question 10

A ____________ requires full payment for the purchase of securities,while a _____________ allows the investor to borrow a portion of the purchase price from the brokerage firm.

Accepted Answer

A) money market account;cash account 
B) cash account;charge account 
C) cash account;margin account 
D) type 5 account;a type 2 account 
A) money market account;cash account 
B) cash account;charge account 
C) cash account;margin account 
D) type 5 account;a type 2 account

Question 11

You sell 100 shares of PGD short at a price of $50 per share.How much is your initial margin,given margin requirements of 40%? If the stock declines to $30 per share,what is your percentage gain or loss on the initial equity?

Accepted Answer

The answer of You sell 100 shares of PGD short...

Question 12

Which of the following are features of margin accounts?

Accepted Answer

A) They leverage returns (i.e. ,magnify the size of a gain or loss) 
B) You must put up part of the purchase price in cash or other securities 
C) Purchased securities are not delivered to the investor 
D) The percentage of the total cost the investor must pay is set by the Federal Reserve Board 
E) All of the above are features 
A) They leverage returns (i.e. ,magnify the size of a gain or loss) 
B) You must put up part of the purchase price in cash or other securities 
C) Purchased securities are not delivered to the investor 
D) The percentage of the total cost the investor must pay is set by the Federal Reserve Board 
E) All of the above are features

Question 13

You buy 100 shares of stock at $40 per share on margin of 40%.If the price of the stock rises to $60 per share,what is your percentage gain in equity? Disregard interest costs.

Accepted Answer

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

Question 14

A type of index that weighs each company by its total market value as a percentage of the total market value for all firms is:

Accepted Answer

A) an equal-weighted index. 
B) a value-weighted index. 
C) an equally-weighted index. 
D) a price-weighted index. 
A) an equal-weighted index. 
B) a value-weighted index. 
C) an equally-weighted index. 
D) a price-weighted index.

Question 15

The minimum holding period to qualify for the long-term capital gains treatment is:

Accepted Answer

A) 1 month. 
B) 12 months. 
C) 18 months. 
D) 24 months. 
E) 36 months. 
A) 1 month. 
B) 12 months. 
C) 18 months. 
D) 24 months. 
E) 36 months.

Question 16

Long-term capital gains are taxed at a higher tax rate than dividends.

Accepted Answer

A) True 
 B)False

Question 17

A stop order is similar to a limit order,except that the order turns into a market order once the stop price is hit.

Accepted Answer

A) True 
 B)False

Question 18

When you short a security you are actually selling a security that no one owns.

Accepted Answer

A) True 
 B)False

Question 19

The amount of taxes paid,divided by taxable income,is called:

Accepted Answer

A) the marginal tax rate. 
B) the average tax rate. 
C) the implied tax rate. 
D) None of the above 
A) the marginal tax rate. 
B) the average tax rate. 
C) the implied tax rate. 
D) None of the above

Question 20

An example of an equal-weighted index or average is the:

Accepted Answer

A) Russell 2000. 
B) Dow Jones Industrial Average. 
C) Value Line Average. 
D) Russell 1000. 
E) S&P 500. 
A) Russell 2000. 
B) Dow Jones Industrial Average. 
C) Value Line Average. 
D) Russell 1000. 
E) S&P 500.

Exam 3: Participating in the Market

The S&P Indexes are often used by professionals because they are weighted by total market value of the companies in the index.

The indexes of The New York Stock Exchange,American Exchange,and NASDAQ are all price-weighted.

Stocks may be used to satisfy margin requirements,rather than cash.

The Value Line Average contains stocks from several exchanges or markets.

The Value Line Average is an equal-weighted index.

________________ represents 75% of the total value of firms listed on the NYSE,while ____________________ includes 1,700 individual firms.

When an investor establishes a position in a security,

If a stock is held for less than 12 months,any gain in value is taxed as ordinary income.

You can write off up to $5,000 in investment losses in any one year.

A ____________ requires full payment for the purchase of securities,while a _____________ allows the investor to borrow a portion of the purchase price from the brokerage firm.

You sell 100 shares of PGD short at a price of $50 per share.How much is your initial margin,given margin requirements of 40%? If the stock declines to $30 per share,what is your percentage gain or loss on the initial equity?

Which of the following are features of margin accounts?

You buy 100 shares of stock at $40 per share on margin of 40%.If the price of the stock rises to $60 per share,what is your percentage gain in equity? Disregard interest costs.

A type of index that weighs each company by its total market value as a percentage of the total market value for all firms is:

The minimum holding period to qualify for the long-term capital gains treatment is:

Long-term capital gains are taxed at a higher tax rate than dividends.

A stop order is similar to a limit order,except that the order turns into a market order once the stop price is hit.

When you short a security you are actually selling a security that no one owns.

The amount of taxes paid,divided by taxable income,is called:

An example of an equal-weighted index or average is the:

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

Filters

represents 75% of the total value of firms listed on the NYSE,while ____ includes 1,700 individual firms.

A requires full payment for the purchase of securities,while a _ allows the investor to borrow a portion of the purchase price from the brokerage firm.