Question 1

Floor brokers on the New York Stock Exchange

Accepted Answer

A) Use their membership to buy and sell for their own account. 
B) Are employees of a member firm and buy and sell for customers of the firm. 
C) Handle limit and other orders placed by other brokers. 
D) Act as brokers for other members. 
E) Maintain a fair and orderly market. 
A) Use their membership to buy and sell for their own account. 
B) Are employees of a member firm and buy and sell for customers of the firm. 
C) Handle limit and other orders placed by other brokers. 
D) Act as brokers for other members. 
E) Maintain a fair and orderly market.

Question 2

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. If the maintenance margin is 25 percent, to what price can Jackson Industries fall before Kathy receives a margin call?

Accepted Answer

A) $21.75 
B) $23.00 
C) $10.67 
D) $15.93 
E) None of the above 
A) $21.75 
B) $23.00 
C) $10.67 
D) $15.93 
E) None of the above

Question 3

A good secondary market is important to the efficiency of the primary market.

Accepted Answer

A) True 
 B)False

Question 4

The over-the-counter market includes all stocks not listed on one of the major exchanges but constitutes a lesser of a dollar value than the New York and American Exchanges combined.

Accepted Answer

A) True 
 B)False

Question 5

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. At the end of one year shares of RossCorp stock are selling for $35 per share and the company paid dividends of $0.85 per share. Assuming that you borrowed 25% of cost of the purchase, what is your rate of return?

Accepted Answer

A) 33.05% 
B) -33.05% 
C) -23.51% 
D) -25.35% 
E) -40.64% 
A) 33.05% 
B) -33.05% 
C) -23.51% 
D) -25.35% 
E) -40.64%

Question 6

In a dealer market trading system shares of stock are sold to the investor with the highest bid price and bought from the seller with the lowest offering price.

Accepted Answer

A) True 
 B)False

Question 7

Negotiation, competitive bids, and best efforts are three forms of underwriting arrangements.

Accepted Answer

A) True 
 B)False

Question 8

You purchased 75 shares of Basket Company for $42 a share. One share of the stock is currently trading between $52 and $53 and you placed a stop loss order at $47. If the stock price drops to $40 a share, what is your return on this investment?

Accepted Answer

A) 8.7% 
B) 9.2% 
C) 10.3% 
D) 11.9% 
E) 12.8% 
A) 8.7% 
B) 9.2% 
C) 10.3% 
D) 11.9% 
E) 12.8%

Question 9

In a call market, trading for individual stocks

Accepted Answer

A) Occurs anytime the market is open. 
B) Takes place at specific times. 
C) Takes place at the open and close of the trading day. 
D) All of the above. 
E) None of the above. 
A) Occurs anytime the market is open. 
B) Takes place at specific times. 
C) Takes place at the open and close of the trading day. 
D) All of the above. 
E) None of the above.

Question 10

Exhibit 4.6
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You decide to sell short 200 shares of XCorp stock at a price of $75. Your margin deposit is 65 percent. Commission on the sale is 1.25%. While you are short, the stock pays a $1.75 per share dividend. Interest on margin debt is 5.25% per year.
-Refer to Exhibit 4.6. At the end of one year you close out your short position by purchasing share of XCorp at $45 per share. The commission is 1.25%. What is your rate of return on the investment?

Accepted Answer

A) -55.92% 
B) 10.31% 
C) 51.06% 
D) 23.1% 
E) -33.05% 
A) -55.92% 
B) 10.31% 
C) 51.06% 
D) 23.1% 
E) -33.05%

Question 11

Exhibit 4.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 percent and Turtle Industries is currently selling at $50 per share.
-Refer to Exhibit 4.1. How many shares of Turtle can Jackie purchase?

Accepted Answer

A) 5,000 
B) 3,000 
C) 1,800 
D) 1,200 
E) None of the above 
A) 5,000 
B) 3,000 
C) 1,800 
D) 1,200 
E) None of the above

Floor brokers on the New York Stock Exchange

A good secondary market is important to the efficiency of the primary market.

The over-the-counter market includes all stocks not listed on one of the major exchanges but constitutes a lesser of a dollar value than the New York and American Exchanges combined.

In a dealer market trading system shares of stock are sold to the investor with the highest bid price and bought from the seller with the lowest offering price.

Negotiation, competitive bids, and best efforts are three forms of underwriting arrangements.

You purchased 75 shares of Basket Company for $42 a share. One share of the stock is currently trading between $52 and $53 and you placed a stop loss order at $47. If the stock price drops to $40 a share, what is your return on this investment?

In a call market, trading for individual stocks

Exhibit 4.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 percent and Turtle Industries is currently selling at $50 per share. -Refer to Exhibit 4.1. How many shares of Turtle can Jackie purchase?

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Introduction to Security Valuation

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Equity Portfolio Management Strategies

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts, Convertible Securities, and Other Embedded Derivatives

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Filters

Exam 4: Organization and Functioning of Securities Markets

Floor brokers on the New York Stock Exchange

A good secondary market is important to the efficiency of the primary market.

The over-the-counter market includes all stocks not listed on one of the major exchanges but constitutes a lesser of a dollar value than the New York and American Exchanges combined.

In a dealer market trading system shares of stock are sold to the investor with the highest bid price and bought from the seller with the lowest offering price.

Negotiation, competitive bids, and best efforts are three forms of underwriting arrangements.

You purchased 75 shares of Basket Company for $42 a share. One share of the stock is currently trading between $52 and $53 and you placed a stop loss order at $47. If the stock price drops to $40 a share, what is your return on this investment?

In a call market, trading for individual stocks

Exhibit 4.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 percent and Turtle Industries is currently selling at $50 per share. -Refer to Exhibit 4.1. How many shares of Turtle can Jackie purchase?

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Introduction to Security Valuation

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Equity Portfolio Management Strategies

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts, Convertible Securities, and Other Embedded Derivatives

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Filters