Question 1

The governmental agency that oversees the capital markets is the

Accepted Answer

A)  Federal Trade Commission. 
B)  Federal Reserve. 
C)  Securities and Exchange Commission. 
D)  Fair Trade and Banking Agency. 
A)  Federal Trade Commission. 
B)  Federal Reserve. 
C)  Securities and Exchange Commission. 
D)  Fair Trade and Banking Agency.

Question 2

A market where securities are are bought from or sold to a market maker is known as a

Accepted Answer

A)  broker market. 
B)  dealer market. 
C)  exchange floor. 
D)  board of exchange. 
A)  broker market. 
B)  dealer market. 
C)  exchange floor. 
D)  board of exchange.

Question 3

Margin trading will magnify losses on a percentage basis.

Accepted Answer

A) True 
 B)False

Question 4

The effects of fluctuating foreign exchange rates may
I. increase a U. S. investor's rate of return.
II. decrease a U. S. investor's rate of return.
III. can be avoided by investing in ADRs.
IV. can be avoided by investing in mutual funds that specialize in foreign stocks.

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  III and IV only 
D)  I, II, III and IV 
A)  I and II only 
B)  I and III only 
C)  III and IV only 
D)  I, II, III and IV

Question 5

Participation in foreign stock markets is complicated and expensive for American investors.

Accepted Answer

A) True 
 B)False

Question 6

Functioning securities exchanges are located in
I. Brazil
II. China
III. Russia
IV. South Korea

Accepted Answer

A)  I, II, III and IV 
B)  I, II and IV only 
C)  I and IV only 
D)  II, III, and IV only 
A)  I, II, III and IV 
B)  I, II and IV only 
C)  I and IV only 
D)  II, III, and IV only

Question 7

A red herring.is a term referring to false or misleading statements in the prospectus.

Accepted Answer

A) True 
 B)False

Question 8

The NYSE and AMEX are examples of broker-dealer markets.

Accepted Answer

A) True 
 B)False

Question 9

The document that describes the issuer of a security's management and financial position is known as a

Accepted Answer

A)  balance sheet. 
B)  10-K report. 
C)  prospectus. 
D)  red herring. 
A)  balance sheet. 
B)  10-K report. 
C)  prospectus. 
D)  red herring.

Question 10

American Depositary Receipts represent

Accepted Answer

A)  receipts for dollar deposits in foreign banks. 
B)  receipts from foreign broker-dealers establishing ownership of foreign stocks. 
C)  receipts for the stocks of foreign companies held by banks in the companies' home country. 
D)  receipts for shares of foreign companies held by U.S. broker-dealers. 
A)  receipts for dollar deposits in foreign banks. 
B)  receipts from foreign broker-dealers establishing ownership of foreign stocks. 
C)  receipts for the stocks of foreign companies held by banks in the companies' home country. 
D)  receipts for shares of foreign companies held by U.S. broker-dealers.

Question 11

The price of stock sold in an IPO is set by bids submitted in the month before trading begins.

Accepted Answer

A) True 
 B)False

Question 12

Kensington Company stock was selling at $132 a share when Charlotte sold 300 shares of the stock short. Today Charlotte bought 300 shares of the same stock at a price of $140 per share to cover her position. Ignoring trading costs, what is the dollar return on Charlotte's investment?

Accepted Answer

A)  $2,400 
B)  -$800 
C)  $800 
D)  $-2,400 
A)  $2,400 
B)  -$800 
C)  $800 
D)  $-2,400

Question 13

A brokerage firm may set a higher margin requirement than that set by the Federal Reserve Board.

Accepted Answer

A) True 
 B)False

Question 14

In a broker market such as the NYSE, the broker

Accepted Answer

A)  will not be able to execute a trade if there are no matching buy and sell offers. 
B)  will act as either broker or dealer depending on which will maximize his or her profit. 
C)  will first attempt to sell from his or her own inventory. 
D)  must attempt to match sellers and buyers at the mid-point of the bid/ask spread. 
A)  will not be able to execute a trade if there are no matching buy and sell offers. 
B)  will act as either broker or dealer depending on which will maximize his or her profit. 
C)  will first attempt to sell from his or her own inventory. 
D)  must attempt to match sellers and buyers at the mid-point of the bid/ask spread.

Question 15

The purpose of the "quiet period" a company must observe from the time it files a registration statement with the SEC until after an IPO is complete is to assure that all investors receive the same information.

Accepted Answer

A) True 
 B)False

Question 16

The NYSE is part of the world's largest international trading network known as NYSE Euronext.

Accepted Answer

A) True 
 B)False

Question 17

Stocks, bonds and exchange traded funds (ETFs) are bought and sold in the capital market.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following practices is prohibited by the Insider Trading and Fraud Act of 1988?

Accepted Answer

A)  the use of nonpublic information to make profitable stock transactions 
B)  selling of stock by officers of the company 
C)  the granting of stock options to corporate executives in lieu of salaries 
D)  private sales of stock between executives of the company 
A)  the use of nonpublic information to make profitable stock transactions 
B)  selling of stock by officers of the company 
C)  the granting of stock options to corporate executives in lieu of salaries 
D)  private sales of stock between executives of the company

Question 19

Assume the foreign exchange rate for the euro was U.S. $1.00 = .91 euro last month. This month, the exchange rate is U.S. $1.00 = .88 euro. All things equal, the dollar value of European stocks

Accepted Answer

A)  decreased. 
B)  increased. 
C)  stayed the same. 
D)  would vary depending on the country. 
A)  decreased. 
B)  increased. 
C)  stayed the same. 
D)  would vary depending on the country.

Question 20

Which one of the following statements concerning the primary market is correct?

Accepted Answer

A)  A transaction in the primary market is between two private stockholders. 
B)  The first public sale of a company's stock in the primary market is called a seasoned new issue. 
C)  The first public sale of a company's stock is called an IPO. 
D)  A rights offering is a direct sale of stock to an institution that participates in the primary market. 
A)  A transaction in the primary market is between two private stockholders. 
B)  The first public sale of a company's stock in the primary market is called a seasoned new issue. 
C)  The first public sale of a company's stock is called an IPO. 
D)  A rights offering is a direct sale of stock to an institution that participates in the primary market.

The governmental agency that oversees the capital markets is the

A market where securities are are bought from or sold to a market maker is known as a

Margin trading will magnify losses on a percentage basis.

The effects of fluctuating foreign exchange rates may I. increase a U. S. investor's rate of return. II. decrease a U. S. investor's rate of return. III. can be avoided by investing in ADRs. IV. can be avoided by investing in mutual funds that specialize in foreign stocks.

Participation in foreign stock markets is complicated and expensive for American investors.

Functioning securities exchanges are located in I. Brazil II. China III. Russia IV. South Korea

A red herring.is a term referring to false or misleading statements in the prospectus.

The NYSE and AMEX are examples of broker-dealer markets.

The document that describes the issuer of a security's management and financial position is known as a

American Depositary Receipts represent

The price of stock sold in an IPO is set by bids submitted in the month before trading begins.

Kensington Company stock was selling at $132 a share when Charlotte sold 300 shares of the stock short. Today Charlotte bought 300 shares of the same stock at a price of $140 per share to cover her position. Ignoring trading costs, what is the dollar return on Charlotte's investment?

A brokerage firm may set a higher margin requirement than that set by the Federal Reserve Board.

In a broker market such as the NYSE, the broker

The purpose of the "quiet period" a company must observe from the time it files a registration statement with the SEC until after an IPO is complete is to assure that all investors receive the same information.

The NYSE is part of the world's largest international trading network known as NYSE Euronext.

Stocks, bonds and exchange traded funds (ETFs) are bought and sold in the capital market.

Which of the following practices is prohibited by the Insider Trading and Fraud Act of 1988?

Assume the foreign exchange rate for the euro was U.S. $1.00 = .91 euro last month. This month, the exchange rate is U.S. $1.00 = .88 euro. All things equal, the dollar value of European stocks

Which one of the following statements concerning the primary market is correct?

The Investment Environment

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters

Exam 2: Securities Markets and Transactions

The governmental agency that oversees the capital markets is the

A market where securities are are bought from or sold to a market maker is known as a

Margin trading will magnify losses on a percentage basis.

The effects of fluctuating foreign exchange rates may I. increase a U. S. investor's rate of return. II. decrease a U. S. investor's rate of return. III. can be avoided by investing in ADRs. IV. can be avoided by investing in mutual funds that specialize in foreign stocks.

Participation in foreign stock markets is complicated and expensive for American investors.

Functioning securities exchanges are located in I. Brazil II. China III. Russia IV. South Korea

A red herring.is a term referring to false or misleading statements in the prospectus.

The NYSE and AMEX are examples of broker-dealer markets.

The document that describes the issuer of a security's management and financial position is known as a

American Depositary Receipts represent

The price of stock sold in an IPO is set by bids submitted in the month before trading begins.

Kensington Company stock was selling at $132 a share when Charlotte sold 300 shares of the stock short. Today Charlotte bought 300 shares of the same stock at a price of $140 per share to cover her position. Ignoring trading costs, what is the dollar return on Charlotte's investment?

A brokerage firm may set a higher margin requirement than that set by the Federal Reserve Board.

In a broker market such as the NYSE, the broker

The purpose of the "quiet period" a company must observe from the time it files a registration statement with the SEC until after an IPO is complete is to assure that all investors receive the same information.

The NYSE is part of the world's largest international trading network known as NYSE Euronext.

Stocks, bonds and exchange traded funds (ETFs) are bought and sold in the capital market.

Which of the following practices is prohibited by the Insider Trading and Fraud Act of 1988?

Assume the foreign exchange rate for the euro was U.S. $1.00 = .91 euro last month. This month, the exchange rate is U.S. $1.00 = .88 euro. All things equal, the dollar value of European stocks

Which one of the following statements concerning the primary market is correct?

The Investment Environment

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters