Question 1

A broker satisfies the investor's trades by buying and selling securities from his or her own inventory.

Accepted Answer

A) True 
 B)False  False

Question 2

A syndicate is a group of several investment banking firms that participate in underwriting and distributing a security issue.

Accepted Answer

A) True 
 B)False  True

Question 3

Stock commissions vary from brokerage firm to brokerage fi rm.

Accepted Answer

A) True 
 B)False  True

Question 4

If an investor feels the price of a stock will decline in the future, which trade should the investor undertake?

Accepted Answer

A)  market order 
B)  buy on margin 
C)  limit order 
D)  short sale 
A)  market order 
B)  buy on margin 
C)  limit order 
D)  short sale

Question 5

The brokers who handle the house broker's overflow are called:

Accepted Answer

A)  specialists 
B)  registered traders 
C)  independent brokers 
D)  all the above 
A)  specialists 
B)  registered traders 
C)  independent brokers 
D)  all the above

Question 6

If a General Electric January 20 put option with a strike price of $50 were about to expire and the market price of the underlying GE stock was $55.00, the price of the put option would have to be __________.

Accepted Answer

A)  $0.00 
B)  $10.00 
C)  $15.00 
D)  $25.00 
A)  $0.00 
B)  $10.00 
C)  $15.00 
D)  $25.00

Question 7

Organized securities exchanges include the New York Stock Exchange, the American Stock Exchange, and NASDAQ.

Accepted Answer

A) True 
 B)False

Question 8

A market is liquid if trades are executed quickly at a price close to fair market value.

Accepted Answer

A) True 
 B)False

Question 9

The price for which the owner is willing to sell the security is called the:

Accepted Answer

A)  bid price 
B)  spread 
C)  ask price 
D)  limit price 
A)  bid price 
B)  spread 
C)  ask price 
D)  limit price

Question 10

The aftermarket is:

Accepted Answer

A)  the over-the-counter market 
B)  the foreign exchange market 
C)  the period after a new issue is initially sold to the public 
D)  the time required for a security to sell 
A)  the over-the-counter market 
B)  the foreign exchange market 
C)  the period after a new issue is initially sold to the public 
D)  the time required for a security to sell

Question 11

Which of the following securities issues do not require competitive bidding?

Accepted Answer

A)  state government bond issues 
B)  public utility security issues 
C)  Federal government bond issues 
D)  corporate bond issues 
A)  state government bond issues 
B)  public utility security issues 
C)  Federal government bond issues 
D)  corporate bond issues

Question 12

Investment banks engage in which of the following activities?

Accepted Answer

A)  trading securities for investors in the secondary market 
B)  selling insurance 
C)  mergers and acquisitions 
D)  setting SEC fees 
A)  trading securities for investors in the secondary market 
B)  selling insurance 
C)  mergers and acquisitions 
D)  setting SEC fees

Question 13

The margin is the price of purchasing one more share of stock.

Accepted Answer

A) True 
 B)False

Question 14

Tombstones are announcements of securities offerings placed in newspapers and other publications.

Accepted Answer

A) True 
 B)False

Question 15

The primary market is a market in which securities are traded among investors.

Accepted Answer

A) True 
 B)False

Question 16

Sales of securities that the seller does not own is called a:

Accepted Answer

A)  stop-loss order 
B)  short sale 
C)  limit order 
D)  maintenance margin 
A)  stop-loss order 
B)  short sale 
C)  limit order 
D)  maintenance margin

Question 17

If a Microsoft January 20 call option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $25.62, the price of the call option would have to be __________ to eliminate arbitrage opportunities.

Accepted Answer

A)  $0.62 
B)  $5.62 
C)  $15.62 
D)  $25.62 
A)  $0.62 
B)  $5.62 
C)  $15.62 
D)  $25.62

Question 18

An underwriting agreement is a contract in which the investment banker agrees to do its best to sell securities to investors at the highest price it can; the investment banker assumes no risk for the possibility that it may fail to issue all authorized shares .

Accepted Answer

A) True 
 B)False

Question 19

___________________ is a highly regulated document which details the issuers operations and finances and must be provided to each buyer of a newly issued security.

Accepted Answer

A)  A prospectus 
B)  An underwriting agreement 
C)  A best efforts agreement 
D)  none of the above 
A)  A prospectus 
B)  An underwriting agreement 
C)  A best efforts agreement 
D)  none of the above

Question 20

The prudent use of derivatives to reduce investment risk, is not similar to the concept of ________________.

Accepted Answer

A)  gambling 
B)  risk aversion 
C)  insurance 
D)  hedging 
A)  gambling 
B)  risk aversion 
C)  insurance 
D)  hedging

A broker satisfies the investor's trades by buying and selling securities from his or her own inventory.

A syndicate is a group of several investment banking firms that participate in underwriting and distributing a security issue.

Stock commissions vary from brokerage firm to brokerage fi rm.

If an investor feels the price of a stock will decline in the future, which trade should the investor undertake?

The brokers who handle the house broker's overflow are called:

If a General Electric January 20 put option with a strike price of $50 were about to expire and the market price of the underlying GE stock was $55.00, the price of the put option would have to be __________.

Organized securities exchanges include the New York Stock Exchange, the American Stock Exchange, and NASDAQ.

A market is liquid if trades are executed quickly at a price close to fair market value.

The price for which the owner is willing to sell the security is called the:

The aftermarket is:

Which of the following securities issues do not require competitive bidding?

Investment banks engage in which of the following activities?

The margin is the price of purchasing one more share of stock.

Tombstones are announcements of securities offerings placed in newspapers and other publications.

The primary market is a market in which securities are traded among investors.

Sales of securities that the seller does not own is called a:

If a Microsoft January 20 call option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $25.62, the price of the call option would have to be __________ to eliminate arbitrage opportunities.

An underwriting agreement is a contract in which the investment banker agrees to do its best to sell securities to investors at the highest price it can; the investment banker assumes no risk for the possibility that it may fail to issue all authorized shares .

___________________ is a highly regulated document which details the issuers operations and finances and must be provided to each buyer of a newly issued security.

The prudent use of derivatives to reduce investment risk, is not similar to the concept of ________________.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 11: Securities and Markets

A broker satisfies the investor's trades by buying and selling securities from his or her own inventory.

A syndicate is a group of several investment banking firms that participate in underwriting and distributing a security issue.

Stock commissions vary from brokerage firm to brokerage fi rm.

If an investor feels the price of a stock will decline in the future, which trade should the investor undertake?

The brokers who handle the house broker's overflow are called:

If a General Electric January 20 put option with a strike price of $50 were about to expire and the market price of the underlying GE stock was $55.00, the price of the put option would have to be __________.

Organized securities exchanges include the New York Stock Exchange, the American Stock Exchange, and NASDAQ.

A market is liquid if trades are executed quickly at a price close to fair market value.

The price for which the owner is willing to sell the security is called the:

The aftermarket is:

Which of the following securities issues do not require competitive bidding?

Investment banks engage in which of the following activities?

The margin is the price of purchasing one more share of stock.

Tombstones are announcements of securities offerings placed in newspapers and other publications.

The primary market is a market in which securities are traded among investors.

Sales of securities that the seller does not own is called a:

If a Microsoft January 20 call option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $25.62, the price of the call option would have to be __________ to eliminate arbitrage opportunities.

An underwriting agreement is a contract in which the investment banker agrees to do its best to sell securities to investors at the highest price it can; the investment banker assumes no risk for the possibility that it may fail to issue all authorized shares .

___________________ is a highly regulated document which details the issuers operations and finances and must be provided to each buyer of a newly issued security.

The prudent use of derivatives to reduce investment risk, is not similar to the concept of ________________.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters