Question 1

Firms that list their stock on an exchange can be delisted for failing to meet the requirements of the exchange.

Accepted Answer

A) True 
 B)False

Question 2

In a short sales, money is borrowed from a broker to purchase stocks.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following are correct statements concerning the NYSE?
I. Each stock has a designated location, called a post, at which its shares are traded.
II. The NYSE is a dealer market.
III. Supply and demand determines the price of each security.
IV. A designated market maker buys and sells to maintain a market for a particular security.

Accepted Answer

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

Question 4

Diversification is the inclusion of a number of different investments in a portfolio with the goal of reducing risk.

Accepted Answer

A) True 
 B)False

Question 5

Which of these alternatives is NOT an option available to companies offering their stock to the public for the first time?

Accepted Answer

A)  a public offering 
B)  private placement 
C)  rights offering 
D)  prospectors 
A)  a public offering 
B)  private placement 
C)  rights offering 
D)  prospectors

Question 6

Stocks and bonds are traded in

Accepted Answer

A)  securities and exchange commissions. 
B)  money markets. 
C)  federal trade commissions. 
D)  capital markets. 
A)  securities and exchange commissions. 
B)  money markets. 
C)  federal trade commissions. 
D)  capital markets.

Question 7

Which of the following are characteristics of short selling?
I. borrowing shares of stock from a brokerage firm or other investors
II. selling shares of stock you do not own
III. betting the stock price will increase
IV. limiting losses per share to the price at which the stock was sold

Accepted Answer

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

Question 8

Emily bought 200 shares of ABC Co. stock for $29.00 per share on 60% margin. Assume she holds the stock for one year and that her interest costs will be $80 over the holding period. Ignoring commissions, what is her percentage return (loss) on invested capital if the stock price went down 10%?

Accepted Answer

A)  -32% 
B)  -19% 
C)  -16% 
D)  -10% 
A)  -32% 
B)  -19% 
C)  -16% 
D)  -10%

Question 9

American investors can participate in international stock markets by

Accepted Answer

A)  purchasing shares in a mutual fund that invests in foreign companies. 
B)  purchasing shares of a U.S. based company such as Coca Cola or McDonald's with extensive international operations. 
C)  purchasing ADSs (American Depositary shares). 
D)  all of the above. 
A)  purchasing shares in a mutual fund that invests in foreign companies. 
B)  purchasing shares of a U.S. based company such as Coca Cola or McDonald's with extensive international operations. 
C)  purchasing ADSs (American Depositary shares). 
D)  all of the above.

Question 10

The Sarbanes-Oxley Act of 2002 strengthens accounting disclosure requirements and ethical guidelines for financial officers.

Accepted Answer

A) True 
 B)False

Question 11

Crossing markets are those that

Accepted Answer

A)  trade foreign securities. 
B)  conduct transactions between institutional and individual traders. 
C)  fill only the orders which have opposing orders at identical prices. 
D)  conduct business at locations in varying time zones. 
A)  trade foreign securities. 
B)  conduct transactions between institutional and individual traders. 
C)  fill only the orders which have opposing orders at identical prices. 
D)  conduct business at locations in varying time zones.

Question 12

Which of the following is currently a requirement for a stock to be listed on the NYSE?

Accepted Answer

A)  A price of at least $10 per share. 
B)  Three consecutive years of profitable operations. 
C)  Gross revenue of at least $15,000,000. 
D)  Global market capitalization of at least $200 million. 
A)  A price of at least $10 per share. 
B)  Three consecutive years of profitable operations. 
C)  Gross revenue of at least $15,000,000. 
D)  Global market capitalization of at least $200 million.

Question 13

IPO activity tends to peak when stock prices

Accepted Answer

A)  have fallen sharply. 
B)  have risen sharply. 
C)  are volatile and unstable. 
D)  Stock prices have relatively little influence on IPO activity. 
A)  have fallen sharply. 
B)  have risen sharply. 
C)  are volatile and unstable. 
D)  Stock prices have relatively little influence on IPO activity.

Question 14

Kayla purchased 500 ADRs in Pearson PLC, a British Company. How will fluctuations in the dollar/pound exchange rate affect the value of her investment?

Accepted Answer

A)  Because the ADRs are denominated in dollars, the exchange rate will have no effect on her investment. 
B)  Changes in the exchange rate will be directly reflected in both the ADR value and dividends. 
C)  If the pound weakens against the dollar, the dollar value of her ADRs will increase. 
D)  If the dollar weakens against the pound, the value of her ADRs will decrease. 
A)  Because the ADRs are denominated in dollars, the exchange rate will have no effect on her investment. 
B)  Changes in the exchange rate will be directly reflected in both the ADR value and dividends. 
C)  If the pound weakens against the dollar, the dollar value of her ADRs will increase. 
D)  If the dollar weakens against the pound, the value of her ADRs will decrease.

Question 15

In recent years

Accepted Answer

A)  broker markets have grown at the expense of dealer markets. 
B)  there has been a major consolidation of trading venues. 
C)  dealer markets have grown at the expense of broker markets. 
D)  retail trading has come to be dominated by electronic communication networks while traditional broker and dealer markets have lost ground. 
A)  broker markets have grown at the expense of dealer markets. 
B)  there has been a major consolidation of trading venues. 
C)  dealer markets have grown at the expense of broker markets. 
D)  retail trading has come to be dominated by electronic communication networks while traditional broker and dealer markets have lost ground.

Question 16

The purchase of stock with cash in the hope of earning a capital gain is known as taking a

Accepted Answer

A)  long position in the stock. 
B)  short position in the stock. 
C)  long, margined position in the stock. 
D)  short, margined position in the stock. 
A)  long position in the stock. 
B)  short position in the stock. 
C)  long, margined position in the stock. 
D)  short, margined position in the stock.

Question 17

The Securities Exchange Act of 1934

Accepted Answer

A)  requires full disclosure of information on all new security issues. 
B)  authorized the SEC to regulate mutual funds. 
C)  established trade associations such as the NASD. 
D)  created the SEC as the regulator of the securities exchanges. 
A)  requires full disclosure of information on all new security issues. 
B)  authorized the SEC to regulate mutual funds. 
C)  established trade associations such as the NASD. 
D)  created the SEC as the regulator of the securities exchanges.

Question 18

Securities that trade in the over-the-counter market are called unlisted securities.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following acts abolished fixed commission schedules?

Accepted Answer

A)  Investment Advisers Act of 1940 
B)  Investment Company Act of 1940 
C)  Securities Acts Amendments of 1975 
D)  Insider Trading and Fraud Act of 1988 
A)  Investment Advisers Act of 1940 
B)  Investment Company Act of 1940 
C)  Securities Acts Amendments of 1975 
D)  Insider Trading and Fraud Act of 1988

Question 20

Which of the following are associated with bull markets?
I. investor pessimism
II. government stimulus
III. economic recovery
IV. low inflation

Accepted Answer

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

Firms that list their stock on an exchange can be delisted for failing to meet the requirements of the exchange.

In a short sales, money is borrowed from a broker to purchase stocks.

Diversification is the inclusion of a number of different investments in a portfolio with the goal of reducing risk.

Which of these alternatives is NOT an option available to companies offering their stock to the public for the first time?

Stocks and bonds are traded in

Which of the following are characteristics of short selling? I. borrowing shares of stock from a brokerage firm or other investors II. selling shares of stock you do not own III. betting the stock price will increase IV. limiting losses per share to the price at which the stock was sold

Emily bought 200 shares of ABC Co. stock for $29.00 per share on 60% margin. Assume she holds the stock for one year and that her interest costs will be $80 over the holding period. Ignoring commissions, what is her percentage return (loss) on invested capital if the stock price went down 10%?

American investors can participate in international stock markets by

The Sarbanes-Oxley Act of 2002 strengthens accounting disclosure requirements and ethical guidelines for financial officers.

Crossing markets are those that

Which of the following is currently a requirement for a stock to be listed on the NYSE?

IPO activity tends to peak when stock prices

Kayla purchased 500 ADRs in Pearson PLC, a British Company. How will fluctuations in the dollar/pound exchange rate affect the value of her investment?

In recent years

The purchase of stock with cash in the hope of earning a capital gain is known as taking a

The Securities Exchange Act of 1934

Securities that trade in the over-the-counter market are called unlisted securities.

Which of the following acts abolished fixed commission schedules?

Which of the following are associated with bull markets? I. investor pessimism II. government stimulus III. economic recovery IV. low inflation

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

Firms that list their stock on an exchange can be delisted for failing to meet the requirements of the exchange.

In a short sales, money is borrowed from a broker to purchase stocks.

Diversification is the inclusion of a number of different investments in a portfolio with the goal of reducing risk.

Which of these alternatives is NOT an option available to companies offering their stock to the public for the first time?

Stocks and bonds are traded in

Which of the following are characteristics of short selling? I. borrowing shares of stock from a brokerage firm or other investors II. selling shares of stock you do not own III. betting the stock price will increase IV. limiting losses per share to the price at which the stock was sold

Emily bought 200 shares of ABC Co. stock for $29.00 per share on 60% margin. Assume she holds the stock for one year and that her interest costs will be $80 over the holding period. Ignoring commissions, what is her percentage return (loss) on invested capital if the stock price went down 10%?

American investors can participate in international stock markets by

The Sarbanes-Oxley Act of 2002 strengthens accounting disclosure requirements and ethical guidelines for financial officers.

Crossing markets are those that

Which of the following is currently a requirement for a stock to be listed on the NYSE?

IPO activity tends to peak when stock prices

Kayla purchased 500 ADRs in Pearson PLC, a British Company. How will fluctuations in the dollar/pound exchange rate affect the value of her investment?

In recent years

The purchase of stock with cash in the hope of earning a capital gain is known as taking a

The Securities Exchange Act of 1934

Securities that trade in the over-the-counter market are called unlisted securities.

Which of the following acts abolished fixed commission schedules?

Which of the following are associated with bull markets? I. investor pessimism II. government stimulus III. economic recovery IV. low inflation

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