Exam 4: Organization and Functioning of Securities Markets

Super DOT is an electronic order-routing system through which member firms can transmit market and limit orders directly to the posts where the securities are traded.

Exhibit 4.3 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Kathy Smith has a margin account with a balance of $60,000. Initial margin requirements are 80 percent, and Jackson Industries is currently selling at $40 per share. -Refer to Exhibit 4.3. How many shares of Jackson can Kathy buy?

Trading in the secondary markets for Corporate bonds

Municipal bonds are sold using the following method or methods:

Exhibit 4.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The maintenance margin is 30%. -Refer to Exhibit 4.7. Assume that you purchase 150 shares of RossCorp stock at $45 each by making a margin deposit of 55%. At what price would you receive a margin call?

When a market is internally efficient, it means that

The over-the-counter market lists more stocks than the New York Stock Exchange and the American Stock Exchange combined.

Exhibit 4.8 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) You sell 100 shares short of AMF Corporation when it is selling at $45 per share. Your margin requirement is 60% and the commission on the sale is $50 and the broker charges 10% annual interest. AMF Corporation paid a $0.50 per share dividend while you were short the stock. After one year you cover your short sale at $35 per share with a $50 commission for the purchase. -Refer to Exhibit 4.8. What is your annual rate of return on this investment?

With a best effort offering, the investment banker performs all of the following roles except:

A 1994 study concluded dealers were colluding to maintain wide bid/ask spreads by concentrating market quotes in quarters instead of eighths. This study eventually led to new order handling rules that required quotes to be available to the public through:

Secondary equity issues are new shares offered by firms that already have stock outstanding.

Which of the following is not a characteristic of a good market for goods and services?

The member of the New York Stock Exchange who acts as a dealer on assigned stocks is known as a

Specialists provide added liquidity in the Nasdaq market.

Margin transaction involves borrowing part of the cost of an investment.

Rule 415, shelf registration, allows large firms to register ten years worth of financing needs all at one time.

Exhibit 4.3 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Kathy Smith has a margin account with a balance of $60,000. Initial margin requirements are 80 percent, and Jackson Industries is currently selling at $40 per share. -Refer to Exhibit 4.3. What is Kathy's profit if Jackson's price rises to $50?

Global trading has eroded the NYSE's share of the market for NYSE-listed stocks.

Investors can leverage their stock transactions with the use of

Exhibit 4.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Heidi Talbott has a margin account with a balance of $50,000. The initial margin deposit is 50 percent, and RC Industries is currently selling at $50 per share. -Refer to Exhibit 4.2. How many shares of RC can Heidi buy?