Question 1

You sold short 150 shares of common stock at $27 per share.The initial margin is 45%.Your initial investment was

Accepted Answer

A) $4,800.60. 
B) $12,000.25. 
C) $2,250.75. 
D) $1,822.50. 
A) $4,800.60. 
B) $12,000.25. 
C) $2,250.75. 
D) $1,822.50.

Question 2

You sold short 100 shares of common stock at $75 per share.The initial margin is 50%.At what stock price would you receive a margin call if the maintenance margin is 30%?

Accepted Answer

A) $90.23 
B) $88.52 
C) $86.54 
D) $87.12 
A) $90.23 
B) $88.52 
C) $86.54 
D) $87.12

Question 3

A ECN is

Accepted Answer

A) a trade of 10,000 (or more) shares of a stock. 
B) a trade of many shares of one stock for one other stock. 
C) a trade of analytic programs between financial analysts. 
D) a fully automated market. 
A) a trade of 10,000 (or more) shares of a stock. 
B) a trade of many shares of one stock for one other stock. 
C) a trade of analytic programs between financial analysts. 
D) a fully automated market.

Question 4

Which of the following orders instructs the broker to buy at or above a specified price?

Accepted Answer

A) Limit-buy order 
B) Discretionary order 
C) Limit-sell order 
D) Stop-buy order 
A) Limit-buy order 
B) Discretionary order 
C) Limit-sell order 
D) Stop-buy order

Question 5

Assume you sell short 100 shares of common stock at $45 per share, with initial margin at 50%.What would be your rate of return if you repurchase the stock at $40 per share? The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction.

Accepted Answer

A) 20.03% 
B) 25.67% 
C) 22.22% 
D) 77.46% 
A) 20.03% 
B) 25.67% 
C) 22.22% 
D) 77.46%

Question 6

Assume you sold short 100 shares of common stock at $50 per share.The initial margin is 60%.What would be the maintenance margin if a margin call is made at a stock price of $60?

Accepted Answer

A) 40% 
B) 33% 
C) 35% 
D) 25% 
A) 40% 
B) 33% 
C) 35% 
D) 25%

Question 7

Initial margin requirements are determined by

Accepted Answer

A) the Securities and Exchange Commission. 
B) the Federal Reserve System. 
C) the New York Stock Exchange. 
D) the Federal Reserve System and the New York Stock Exchange. 
A) the Securities and Exchange Commission. 
B) the Federal Reserve System. 
C) the New York Stock Exchange. 
D) the Federal Reserve System and the New York Stock Exchange.

Question 8

You sold short 300 shares of common stock at $55 per share.The initial margin is 60%.At what stock price would you receive a margin call if the maintenance margin is 35%?

Accepted Answer

A) $51.00 
B) $65.19 
C) $35.22 
D) $40.36 
A) $51.00 
B) $65.19 
C) $35.22 
D) $40.36

Question 9

Assume you sell short 1,000 shares of common stock at $35 per share, with initial margin at 50%.What would be your rate of return if you repurchase the stock at $25 per share? The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction.

Accepted Answer

A) 20.47% 
B) 25.63% 
C) 57.14% 
D) 77.23% 
A) 20.47% 
B) 25.63% 
C) 57.14% 
D) 77.23%

Question 10

Assume you sold short 100 shares of common stock at $70 per share.The initial margin is 50%.What would be the maintenance margin if a margin call is made at a stock price of $85?

Accepted Answer

A) 40.5% 
B) 20.5% 
C) 35.5% 
D) 23.5% 
A) 40.5% 
B) 20.5% 
C) 35.5% 
D) 23.5%

Question 11

You sold JCP stock short at $80 per share.Your losses could be minimized by placing a

Accepted Answer

A) limit-sell order. 
B) limit-buy order. 
C) stop-buy order. 
D) day-order. 
A) limit-sell order. 
B) limit-buy order. 
C) stop-buy order. 
D) day-order.

Question 12

You purchased 100 shares of common stock on margin for $50 per share.The initial margin is 50%, and the stock pays no dividend.What would your rate of return be if you sell the stock at $56 per share? Ignore interest on margin.

Accepted Answer

A) 28% 
B) 33% 
C) 14% 
D) 42% 
E) 24% 
A) 28% 
B) 33% 
C) 14% 
D) 42% 
E) 24%

Question 13

Which of the following is true regarding private placements of primary security offerings?

Accepted Answer

A) Extensive and costly registration statements are required by the SEC. 
B) For very large issues, they are better suited than public offerings. 
C) They trade in secondary markets. 
D) The shares are sold directly to a small group of institutional or wealthy investors. 
A) Extensive and costly registration statements are required by the SEC. 
B) For very large issues, they are better suited than public offerings. 
C) They trade in secondary markets. 
D) The shares are sold directly to a small group of institutional or wealthy investors.

Question 14

Which of the following statements regarding the specialist are true?

Accepted Answer

A) Specialists maintain a book listing outstanding, unexecuted limit orders. 
B) Specialists earn income from commissions and spreads in stock prices. 
C) Specialists stand ready to trade at quoted bid and ask prices. 
D) Specialists cannot trade in their own accounts. 
E) Specialists maintain a book listing outstanding, unexecuted limit orders, earn income from commissions and spreads in stock prices, and stand ready to trade at quoted bid and ask prices. 
A) Specialists maintain a book listing outstanding, unexecuted limit orders. 
B) Specialists earn income from commissions and spreads in stock prices. 
C) Specialists stand ready to trade at quoted bid and ask prices. 
D) Specialists cannot trade in their own accounts. 
E) Specialists maintain a book listing outstanding, unexecuted limit orders, earn income from commissions and spreads in stock prices, and stand ready to trade at quoted bid and ask prices.

Question 15

Which one of the following statements regarding orders is false?

Accepted Answer

A) A market order is simply an order to buy or sell a stock immediately at the prevailing market price. 
B) A limit-sell order is where investors specify prices at which they are willing to sell a security. 
C) If stock ABC is selling at $50, a limit-buy order may instruct the broker to buy the stock if and when the share price falls below $45. 
D) A market order is an order to buy or sell a stock on a specific exchange (market). 
A) A market order is simply an order to buy or sell a stock immediately at the prevailing market price. 
B) A limit-sell order is where investors specify prices at which they are willing to sell a security. 
C) If stock ABC is selling at $50, a limit-buy order may instruct the broker to buy the stock if and when the share price falls below $45. 
D) A market order is an order to buy or sell a stock on a specific exchange (market).

Question 16

You sold short 100 shares of common stock at $45 per share.The initial margin is 50%.Your initial investment was

Accepted Answer

A) $4,800. 
B) $12,000. 
C) $2,250. 
D) $7,200. 
A) $4,800. 
B) $12,000. 
C) $2,250. 
D) $7,200.

Question 17

Assume you sold short 100 shares of common stock at $40 per share.The initial margin is 50%.What would be the maintenance margin if a margin call is made at a stock price of $50?

Accepted Answer

A) 40% 
B) 20% 
C) 35% 
D) 25% 
A) 40% 
B) 20% 
C) 35% 
D) 25%

Question 18

You purchased 100 shares of XON common stock on margin at $60 per share.Assume the initial margin is 50%, and the maintenance margin is 30%.Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

Accepted Answer

A) $42.86 
B) $50.75 
C) $49.67 
D) $80.34 
A) $42.86 
B) $50.75 
C) $49.67 
D) $80.34

Question 19

According to the CFA Institute Standards of Professional Conduct, CFA Institute members have responsibilities to all of the following, except

Accepted Answer

A) the government. 
B) the profession. 
C) the public. 
D) the employer. 
A) the government. 
B) the profession. 
C) the public. 
D) the employer.

Question 20

Which of the following orders instructs the broker to buy at or below a specified price?

Accepted Answer

A) Limit-loss order 
B) Discretionary order 
C) Limit-buy order 
D) Stop-buy order 
A) Limit-loss order 
B) Discretionary order 
C) Limit-buy order 
D) Stop-buy order

Exam 3: How Securities Are Traded

You sold short 150 shares of common stock at $27 per share.The initial margin is 45%.Your initial investment was

You sold short 100 shares of common stock at $75 per share.The initial margin is 50%.At what stock price would you receive a margin call if the maintenance margin is 30%?

A ECN is

Which of the following orders instructs the broker to buy at or above a specified price?

Assume you sold short 100 shares of common stock at $50 per share.The initial margin is 60%.What would be the maintenance margin if a margin call is made at a stock price of $60?

Initial margin requirements are determined by

You sold short 300 shares of common stock at $55 per share.The initial margin is 60%.At what stock price would you receive a margin call if the maintenance margin is 35%?

Assume you sold short 100 shares of common stock at $70 per share.The initial margin is 50%.What would be the maintenance margin if a margin call is made at a stock price of $85?

You sold JCP stock short at $80 per share.Your losses could be minimized by placing a

You purchased 100 shares of common stock on margin for $50 per share.The initial margin is 50%, and the stock pays no dividend.What would your rate of return be if you sell the stock at $56 per share? Ignore interest on margin.

Which of the following is true regarding private placements of primary security offerings?

Which of the following statements regarding the specialist are true?

Which one of the following statements regarding orders is false?

You sold short 100 shares of common stock at $45 per share.The initial margin is 50%.Your initial investment was

Assume you sold short 100 shares of common stock at $40 per share.The initial margin is 50%.What would be the maintenance margin if a margin call is made at a stock price of $50?

You purchased 100 shares of XON common stock on margin at $60 per share.Assume the initial margin is 50%, and the maintenance margin is 30%.Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

According to the CFA Institute Standards of Professional Conduct, CFA Institute members have responsibilities to all of the following, except

Which of the following orders instructs the broker to buy at or below a specified price?

The Investment Environment

Financial Markets, Asset Classes and Financial Instruments

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioural Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

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Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

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