Question 1

The Dow Jones Composite index combines the Dow Jones Industrial, Transportation, and Utility averages into an index of 65 stocks.

Accepted Answer

A) True 
 B)False  True

Question 2

Minimum maintenance standards require that a margined investor always maintains the initial margin position.

Accepted Answer

A) True 
 B)False  False

Question 3

The S&P Indexes are often used by professionals because they are weighted by total market value of the companies in the index.

Accepted Answer

A) True 
 B)False  True

Question 4

Using the Table below, assume a single person has a taxable income of $40,000.
 $$\begin{array}{l}
\underline{\text { Taxable Income }} \quad\underline{ \text { Tax Rate}}\
\begin{array} { l l } 
0 - \$ 7,300 & 10 \% \
\$ 7,300 - \$ 29,700 & 15 \% \
\$ 29,700 - \$ 40,000 & 25 \%
\end{array}
\end{array}$$ (a) How much tax will be owed? (You will need to refer to the Table plus make your own calculations).
(b) What is the person's average tax rate?
(c) What is the person's marginal tax rate?

Accepted Answer

(a) $6,665
(b) 16.67

Question 5

The tax rate that specifically applies to each new dollar of income is the:

Accepted Answer

A) marginal tax rate. 
B) average tax rate. 
C) short-term capital gains tax rate. 
D) long-term capital gains tax rate. 
A) marginal tax rate. 
B) average tax rate. 
C) short-term capital gains tax rate. 
D) long-term capital gains tax rate.

Question 6

For investors putting their funds in tax-deferred accounts, the capital gains tax provisions during the holding period are irrelevant.

Accepted Answer

A) True 
 B)False

Question 7

The Standard & Poor's 500 Stock Index is widely followed by professional money managers as a measure of broad stock market activity.

Accepted Answer

A) True 
 B)False

Question 8

Stocks may be used to satisfy margin requirements, rather than cash.

Accepted Answer

A) True 
 B)False

Question 9

The tax rate that is simply the amount of taxes paid, divided by taxable income is:

Accepted Answer

A) the marginal tax rate. 
B) the average tax rate. 
C) the short-term capital gains tax rate. 
D) the long-term capital gains tax rate. 
A) the marginal tax rate. 
B) the average tax rate. 
C) the short-term capital gains tax rate. 
D) the long-term capital gains tax rate.

Question 10

Long-term capital gains are taxed as ordinary income.

Accepted Answer

A) True 
 B)False

Question 11

The Standard & Poor's Indexes are price-weighted indexes.

Accepted Answer

A) True 
 B)False

Question 12

Commissions charged by stock brokers tend to vary among different classes of brokers.

Accepted Answer

A) True 
 B)False

Question 13

The minimum holding period to qualify for the long-term capital gains treatment is:

Accepted Answer

A) 1 month. 
B) 12 months. 
C) 18 months. 
D) 24 months. 
E) 36 months. 
A) 1 month. 
B) 12 months. 
C) 18 months. 
D) 24 months. 
E) 36 months.

Question 14

Online brokers have become popular because:

Accepted Answer

A) they offer discounts on stock research reports. 
B) their commissions are lower than full-service or discount brokers. 
C) they specialize in the stock of low priced securities. 
D) only online brokers can service self-directed individual retirement accounts. 
A) they offer discounts on stock research reports. 
B) their commissions are lower than full-service or discount brokers. 
C) they specialize in the stock of low priced securities. 
D) only online brokers can service self-directed individual retirement accounts.

Question 15

The NASDAQ 100 includes high tech firms such as:

Accepted Answer

A) IBM, Oracle, and Cisco Systems. 
B) Microsoft, Intel, and Cisco Systems. 
C) Hewlett Packard, Cisco Systems, and Compaq. 
D) All of the above 
A) IBM, Oracle, and Cisco Systems. 
B) Microsoft, Intel, and Cisco Systems. 
C) Hewlett Packard, Cisco Systems, and Compaq. 
D) All of the above

Question 16

Long-term capital gains treatment serves as encouragement for investors to buy:

Accepted Answer

A) high-yield stocks. 
B) municipal bonds. 
C) U.S. government bonds. 
D) growth stocks. 
A) high-yield stocks. 
B) municipal bonds. 
C) U.S. government bonds. 
D) growth stocks.

Question 17

The Wilshire 5000 index includes all stocks on the New York and American Stock Exchanges, and most active NASDAQ issues.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is NOT a characteristic of the Wilshire 5000 Equity Index?

Accepted Answer

A) It is most frequently used by individual investors 
B) It represents the total dollar value of 5,000 stocks on a value-weighted basis 
C) It contains all NYSE and AMEX issues, and most active NASDAQ issues 
D) It is used as a measure of the broadest market performance index 
E) It is a value-weighted index 
A) It is most frequently used by individual investors 
B) It represents the total dollar value of 5,000 stocks on a value-weighted basis 
C) It contains all NYSE and AMEX issues, and most active NASDAQ issues 
D) It is used as a measure of the broadest market performance index 
E) It is a value-weighted index

Question 19

Korean stock prices are measured by the Nikkei 225 average.

Accepted Answer

A) True 
 B)False

Question 20

Tax rates that apply to income within a given tax bracket are referred to as marginal tax rates.

Accepted Answer

A) True 
 B)False

Exam 3: Participating in the Market

The Dow Jones Composite index combines the Dow Jones Industrial, Transportation, and Utility averages into an index of 65 stocks.

Minimum maintenance standards require that a margined investor always maintains the initial margin position.

The S&P Indexes are often used by professionals because they are weighted by total market value of the companies in the index.

The tax rate that specifically applies to each new dollar of income is the:

For investors putting their funds in tax-deferred accounts, the capital gains tax provisions during the holding period are irrelevant.

The Standard & Poor's 500 Stock Index is widely followed by professional money managers as a measure of broad stock market activity.

Stocks may be used to satisfy margin requirements, rather than cash.

The tax rate that is simply the amount of taxes paid, divided by taxable income is:

Long-term capital gains are taxed as ordinary income.

The Standard & Poor's Indexes are price-weighted indexes.

Commissions charged by stock brokers tend to vary among different classes of brokers.

The minimum holding period to qualify for the long-term capital gains treatment is:

Online brokers have become popular because:

The NASDAQ 100 includes high tech firms such as:

Long-term capital gains treatment serves as encouragement for investors to buy:

The Wilshire 5000 index includes all stocks on the New York and American Stock Exchanges, and most active NASDAQ issues.

Which of the following is NOT a characteristic of the Wilshire 5000 Equity Index?

Korean stock prices are measured by the Nikkei 225 average.

Tax rates that apply to income within a given tax bracket are referred to as marginal tax rates.

The Investment Setting

Security Markets

Investment Companies: Mutual Funds, Exchange-Traded Funds, Closed-End Funds, and Unit Investment Trusts

Economic Activity

Industry Analysis

Valuation of the Individual Firm

Financial Statement Analysis

Efficient Markets and Anomalies

Behavioral Finance and Technical Analysis

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Put and Call Options

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

International Securities Markets

Investments in Real Assets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

A Comprehensive Analysis for Real Estate Investment Decisions

The Makeup of Institutional Investors

Filters