Exam 3: How Securities Are Traded

In a typical underwriting arrangement the investment banking firm I) sells shares to the public via an underwriting syndicate. II) purchases the securities from the issuing company. III) assumes the full risk that the shares may not be sold at the offering price. IV) agrees to help the firm sell the issue to the public, but does not actually purchase the securities.

When a firm markets new securities, a preliminary registration statement must be filed with

Assume you sell short 100 shares of common stock at $45 per share, with initial margin at 50%.What would be your rate of return if you repurchase the stock at $40 per share The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction.

You want to purchase GM stock at $40 from your broker using as little of your own money as possible.If initial margin is 50% and you have $4,000 to invest, how many shares can you buy

You buy 300 shares of Qualitycorp for $30 per share and deposit initial margin of 50%.The next day, Qualitycorp's price drops to $25 per share.What is your actual margin

You purchased 100 shares of common stock on margin at $40 per share.Assume the initial margin is 50% and the stock pays no dividend.What would the maintenance margin be if a margin call is made at a stock price of $25 Ignore interest on margin.

Specialists on stock exchanges perform which of the following functions

A sale by IBM of new stock to the public would be a(n)

The Securities Act of 1934 I) requires full disclosure of relevant information relating to the issue of new securities. II. requires registration of new securities. III. requires issuance of a prospectus detailing financial prospects of the firm. IV. established the SEC. V. requires periodic disclosure of relevant financial information. VI. empowers SEC to regulate exchanges, OTC trading, brokers, and dealers.

According to the CFA Institute Standards of Professional Conduct, CFA Institute members have responsibilities to all of the following except

Which of the following orders instructs the broker to buy at the current market price

Which of the following is true regarding private placements of primary security offerings

The preliminary prospectus is referred to as a

You purchased 100 shares of common stock on margin for $50 per share.The initial margin is 50% and the stock pays no dividend.What would your rate of return be if you sell the stock at $56 per share Ignore interest on margin.

You sold short 150 shares of common stock at $27 per share.The initial margin is 45%.Your initial investment was

Which of the following orders instructs the broker to sell at or below a specified price

A specialist on the AMEX Stock Exchange is offering to buy a security for $37.50.A broker in Oklahoma City wants to sell the security for his client.The Intermarket Trading System shows a bid price of $37.375 on the NYSE.What should the broker do

Shelf registration

Shares for short transactions

Assume you sold short 100 shares of common stock at $50 per share.The initial margin is 60%.What would be the maintenance margin if a margin call is made at a stock price of $60