Question 1

The _____ tracks the stock prices of some of the largest and most actively traded companies listed on the Tokyo Stock Exchange.

Accepted Answer

A)  Nikkei 225 
B)  SSE Composite 
C)  Standard & Poor's 500 
D)  FTSE 100 
A)  Nikkei 225 
B)  SSE Composite 
C)  Standard & Poor's 500 
D)  FTSE 100

Question 2

Oscilance Inc., a watch manufacturing company, issues new stocks. However, instead of floating its shares in public, it directly negotiates with a small number of accredited investors that meet specific financial requirements set by the Securities Exchange Commission (SEC). Which of the following methods of issuing securities is being used by Oscilance in the given scenario?

Accepted Answer

A)  Peer-to-peer investing 
B)  Proxy selling 
C)  A private placement 
D)  A secondary market offering 
A)  Peer-to-peer investing 
B)  Proxy selling 
C)  A private placement 
D)  A secondary market offering

Question 3

Which of the following is true of securities brokers?

Accepted Answer

A)  They earn a profit by selling securities for higher prices than they paid to purchase them. 
B)  They collect premiums from policyholders. 
C)  They act as agents for investors who want to buy or sell financial securities. 
D)  They issue new securities to raise financial capital. 
A)  They earn a profit by selling securities for higher prices than they paid to purchase them. 
B)  They collect premiums from policyholders. 
C)  They act as agents for investors who want to buy or sell financial securities. 
D)  They issue new securities to raise financial capital.

Question 4

In the context of a public offering, a(n) _____ is a complex document that must include a firm's key financial statements plus additional information about the company's management, its properties, its competition, and the intended uses for the funds it plans to obtain from the offering.

Accepted Answer

A)  registration statement 
B)  corporate bylaw 
C)  article of incorporation 
D)  franchise agreement 
A)  registration statement 
B)  corporate bylaw 
C)  article of incorporation 
D)  franchise agreement

Question 5

A drawback of actively managed funds is:

Accepted Answer

A)  the meagre fee that the professional managers of the funds receive. 
B)  that significant tax consequences occur when there is a lot of trading. 
C)  the difficulty in redeeming shares from the fund. 
D)  the uncertainty of recovering at least a portion of the initial investment. 
A)  the meagre fee that the professional managers of the funds receive. 
B)  that significant tax consequences occur when there is a lot of trading. 
C)  the difficulty in redeeming shares from the fund. 
D)  the uncertainty of recovering at least a portion of the initial investment.

Question 6

A downside of placing market orders is that investors may end up buying at a higher price than he or she expected to pay.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is true of the common stockholders' right to a residual claim on assets?

Accepted Answer

A)  A firm must pay any back taxes, legal expenses, wages owed to workers, and debts owed to creditors before the owners get anything. 
B)  If a corporation issues new stock, existing stockholders can purchase new shares in proportion to their ownership before the stock is offered to the other investors. 
C)  If a firm skips a stockholder's dividend in one period, the amount it must pay the next period is equal to the dividend for that period plus the amount of the dividend it skipped in the previous period. 
D)  A firm has a legal obligation to pay interest on bonds-and to pay the bondholder the par value of the bond when it matures. 
A)  A firm must pay any back taxes, legal expenses, wages owed to workers, and debts owed to creditors before the owners get anything. 
B)  If a corporation issues new stock, existing stockholders can purchase new shares in proportion to their ownership before the stock is offered to the other investors. 
C)  If a firm skips a stockholder's dividend in one period, the amount it must pay the next period is equal to the dividend for that period plus the amount of the dividend it skipped in the previous period. 
D)  A firm has a legal obligation to pay interest on bonds-and to pay the bondholder the par value of the bond when it matures.

Question 8

The Securities Exchange Act of 1934 required that all publicly traded firms with at least _____ shareholders and $10 million in assets file quarterly and annual financial reports with the Securities and Exchange Commission (SEC).

Accepted Answer

A)  10,000 
B)  6,000 
C)  100 
D)  500 
A)  10,000 
B)  6,000 
C)  100 
D)  500

Question 9

Paula wants to buy stocks in a publicly traded company that deals in networking equipment. However, the company is not listed on any of the major stock exchanges. Paula should, therefore, purchase the stocks of the company in the _____.

Accepted Answer

A)  over-the-counter market 
B)  money market 
C)  free market 
D)  private-player market 
A)  over-the-counter market 
B)  money market 
C)  free market 
D)  private-player market

Question 10

Define stock index, and briefly discuss two of the popular stock indices.

Accepted Answer

Answers will vary. One of the most commo

Question 11

A _____ tracks the prices of a large group of stocks that meet certain defined criteria.

Accepted Answer

A)  stock pot 
B)  stock index 
C)  stock option 
D)  stock warrant 
A)  stock pot 
B)  stock index 
C)  stock option 
D)  stock warrant

Question 12

In the context of buying and selling securities, placing a sell limit order:

Accepted Answer

A)  prevents your broker from buying low and selling high over a relatively short time horizon. 
B)  prevents your broker from selling your stock at a price you believe is too low. 
C)  instructs your broker to sell your stock at the current market price. 
D)  instructs your broker to sell your stock just before it becomes undervalued in the market. 
A)  prevents your broker from buying low and selling high over a relatively short time horizon. 
B)  prevents your broker from selling your stock at a price you believe is too low. 
C)  instructs your broker to sell your stock at the current market price. 
D)  instructs your broker to sell your stock just before it becomes undervalued in the market.

Question 13

Private placements are usually more time consuming and complex than public offerings.

Accepted Answer

A) True 
 B)False

Question 14

Mr. Troy wants to buy stocks of a local retail company. He needs help with market research and requires some investing advice, as well as someone to do the trading for him. Mr. Troy should contact a(n) _____.

Accepted Answer

A)  accredited investor 
B)  credit union 
C)  institutional investor 
D)  securities broker 
A)  accredited investor 
B)  credit union 
C)  institutional investor 
D)  securities broker

Question 15

In the context of major stock price indices, the _____ tracks the stock prices of relatively small but actively traded U.S. corporations.

Accepted Answer

A)  Nikkei 225 
B)  Russell 2000 
C)  Standard & Poor's 500 
D)  FTSE 100 
A)  Nikkei 225 
B)  Russell 2000 
C)  Standard & Poor's 500 
D)  FTSE 100

Question 16

Members of the general public can directly trade stocks in the over-the-counter market.

Accepted Answer

A) True 
 B)False

Question 17

A _____ is the most common depository institution.

Accepted Answer

A)  not-for-profit organization 
B)  savings and loan association 
C)  credit union 
D)  commercial bank 
A)  not-for-profit organization 
B)  savings and loan association 
C)  credit union 
D)  commercial bank

Question 18

Grenville Osborn Corp., a commercial bank in the United States, faces legal action for its private dealings in the securities market and in selling insurance. The Grenville Osborn & Co. is in violation of the:

Accepted Answer

A)  Sarbanes-Oxley Act. 
B)  Glass-Steagall Act. 
C)  Gramm-Bliley-Leach Act. 
D)  Securities Act. 
A)  Sarbanes-Oxley Act. 
B)  Glass-Steagall Act. 
C)  Gramm-Bliley-Leach Act. 
D)  Securities Act.

Question 19

The difference between the prices at which securities are bought and sold is called a thrift.

Accepted Answer

A) True 
 B)False

Question 20

The Securities and Exchange Commission (SEC) has the authority to go after individuals who engage in illegal insider trading, which is the practice of:

Accepted Answer

A)  creating dummy corporations to serve as a front for companies trading in illegal goods. 
B)  disseminating fraudulent information in trade-related chat rooms or forums. 
C)  deceptively promoting securities of small companies of under $250 million market capitalization and then selling them to an unwary public. 
D)  using inside information to profit unfairly from trading in a company's securities. 
A)  creating dummy corporations to serve as a front for companies trading in illegal goods. 
B)  disseminating fraudulent information in trade-related chat rooms or forums. 
C)  deceptively promoting securities of small companies of under $250 million market capitalization and then selling them to an unwary public. 
D)  using inside information to profit unfairly from trading in a company's securities.

The _____ tracks the stock prices of some of the largest and most actively traded companies listed on the Tokyo Stock Exchange.

Which of the following is true of securities brokers?

In the context of a public offering, a(n) _____ is a complex document that must include a firm's key financial statements plus additional information about the company's management, its properties, its competition, and the intended uses for the funds it plans to obtain from the offering.

A drawback of actively managed funds is:

A downside of placing market orders is that investors may end up buying at a higher price than he or she expected to pay.

Which of the following statements is true of the common stockholders' right to a residual claim on assets?

The Securities Exchange Act of 1934 required that all publicly traded firms with at least _____ shareholders and $10 million in assets file quarterly and annual financial reports with the Securities and Exchange Commission (SEC).

Paula wants to buy stocks in a publicly traded company that deals in networking equipment. However, the company is not listed on any of the major stock exchanges. Paula should, therefore, purchase the stocks of the company in the _____.

Define stock index, and briefly discuss two of the popular stock indices.

A _____ tracks the prices of a large group of stocks that meet certain defined criteria.

In the context of buying and selling securities, placing a sell limit order:

Private placements are usually more time consuming and complex than public offerings.

Mr. Troy wants to buy stocks of a local retail company. He needs help with market research and requires some investing advice, as well as someone to do the trading for him. Mr. Troy should contact a(n) _____.

In the context of major stock price indices, the _____ tracks the stock prices of relatively small but actively traded U.S. corporations.

Members of the general public can directly trade stocks in the over-the-counter market.

A _____ is the most common depository institution.

Grenville Osborn Corp., a commercial bank in the United States, faces legal action for its private dealings in the securities market and in selling insurance. The Grenville Osborn & Co. is in violation of the:

The difference between the prices at which securities are bought and sold is called a thrift.

The Securities and Exchange Commission (SEC) has the authority to go after individuals who engage in illegal insider trading, which is the practice of:

Business Now: Change Is the Only Constant

Economics: The Framework of Business

The World Marketplace: Business Without Borders

Business Ethics Social Responsibility: Doing Well by Doing Good

Business Communication: Creating Delivering Messages That Matter

Business Formation: Choosing the Form That Fits

Small Business Entrepreneurship: Economic Rocket Fuel

Accounting: Decision Making by the Numbers

Finance: Acquiring Using Funds to Maximize Value

Marketing: Building Profitable Customer Connections

Product and Promotion: Creating and Communicating Value

Distribution and Pricing: Right Product, Right Person, Right Place, Right Price

Management, Motivation, and Leadership: Bringing Business to Life

Human Resource Management: Building a Top Quality Workforce

Managing Information Technology: Finding New Ways to Learn and Link

Operations Management: Putting It All Together

Appendix :personal-Finance-Appendix

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Exam 10: Securities Markets: Trading Financial Resources

The _____ tracks the stock prices of some of the largest and most actively traded companies listed on the Tokyo Stock Exchange.

Which of the following is true of securities brokers?

In the context of a public offering, a(n) _____ is a complex document that must include a firm's key financial statements plus additional information about the company's management, its properties, its competition, and the intended uses for the funds it plans to obtain from the offering.

A drawback of actively managed funds is:

A downside of placing market orders is that investors may end up buying at a higher price than he or she expected to pay.

Which of the following statements is true of the common stockholders' right to a residual claim on assets?

The Securities Exchange Act of 1934 required that all publicly traded firms with at least _____ shareholders and $10 million in assets file quarterly and annual financial reports with the Securities and Exchange Commission (SEC).

Paula wants to buy stocks in a publicly traded company that deals in networking equipment. However, the company is not listed on any of the major stock exchanges. Paula should, therefore, purchase the stocks of the company in the _____.

Define stock index, and briefly discuss two of the popular stock indices.

A _____ tracks the prices of a large group of stocks that meet certain defined criteria.

In the context of buying and selling securities, placing a sell limit order:

Private placements are usually more time consuming and complex than public offerings.

Mr. Troy wants to buy stocks of a local retail company. He needs help with market research and requires some investing advice, as well as someone to do the trading for him. Mr. Troy should contact a(n) _____.

In the context of major stock price indices, the _____ tracks the stock prices of relatively small but actively traded U.S. corporations.

Members of the general public can directly trade stocks in the over-the-counter market.

A _____ is the most common depository institution.

Grenville Osborn Corp., a commercial bank in the United States, faces legal action for its private dealings in the securities market and in selling insurance. The Grenville Osborn & Co. is in violation of the:

The difference between the prices at which securities are bought and sold is called a thrift.

The Securities and Exchange Commission (SEC) has the authority to go after individuals who engage in illegal insider trading, which is the practice of:

Business Now: Change Is the Only Constant

Economics: The Framework of Business

The World Marketplace: Business Without Borders

Business Ethics Social Responsibility: Doing Well by Doing Good

Business Communication: Creating Delivering Messages That Matter

Business Formation: Choosing the Form That Fits

Small Business Entrepreneurship: Economic Rocket Fuel

Accounting: Decision Making by the Numbers

Finance: Acquiring Using Funds to Maximize Value

Marketing: Building Profitable Customer Connections

Product and Promotion: Creating and Communicating Value

Distribution and Pricing: Right Product, Right Person, Right Place, Right Price

Management, Motivation, and Leadership: Bringing Business to Life

Human Resource Management: Building a Top Quality Workforce

Managing Information Technology: Finding New Ways to Learn and Link

Operations Management: Putting It All Together

Appendix :personal-Finance-Appendix

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