Question 1

The Russell 2000 measures performance of the 2000 largest stocks, based on market value.

Accepted Answer

A) True 
 B)False

Question 2

The success of a short investment position depends on:

Accepted Answer

A) a level stock price. 
B) a declining stock market. 
C) an increasing stock price. 
D) declining interest rates. 
E) More than one of the above 
A) a level stock price. 
B) a declining stock market. 
C) an increasing stock price. 
D) declining interest rates. 
E) More than one of the above

Question 3

A value-weighted index tends to give more importance to large companies than small companies.

Accepted Answer

A) True 
 B)False

Question 4

An example of an equal-weighted index or average is the:

Accepted Answer

A) Russell 2000. 
B) Dow Jones Industrial Average. 
C) Value Line Average. 
D) Russell 1000. 
E) S&P 500. 
A) Russell 2000. 
B) Dow Jones Industrial Average. 
C) Value Line Average. 
D) Russell 1000. 
E) S&P 500.

Question 5

You buy 100 shares of stock at $40 per share on margin of 40%. If the price of the stock rises to $60 per share, what is your percentage gain in equity? Disregard interest costs.

Accepted Answer

125%
Explanation: @#IMG-DLM& C

Question 6

The Securities and Exchange Commission publishes a list of approved securities that may be borrowed against.

Accepted Answer

A) True 
 B)False

Question 7

The Dow Jones Industrial Average is not adjusted for stock splits.

Accepted Answer

A) True 
 B)False

Question 8

If a stock is held for less than 12 months, any gain in value is taxed as ordinary income.

Accepted Answer

A) True 
 B)False

Question 9

The Dow Jones Industrial Average is a value-weighted index.

Accepted Answer

A) True 
 B)False

Question 10

When you short a security you are actually selling a security that no one owns.

Accepted Answer

A) True 
 B)False

Question 11

A change in a high-priced stock's value has a greater impact on the Dow Jones Industrial Average than a change in a low-priced stock.

Accepted Answer

A) True 
 B)False

Question 12

A margin represents the amount of money an investor may borrow to purchase securities.

Accepted Answer

A) True 
 B)False

Question 13

The Value Line Average contains stocks from several exchanges or markets.

Accepted Answer

A) True 
 B)False

Question 14

The following are all value-weighted indexes, except:

Accepted Answer

A) the S&P 500. 
B) the Dow Jones Industrial Average. 
C) midcap 400. 
D) the S&P Industrials (400 stocks). 
E) wilshire 5000. 
A) the S&P 500. 
B) the Dow Jones Industrial Average. 
C) midcap 400. 
D) the S&P Industrials (400 stocks). 
E) wilshire 5000.

Question 15

A limit order can ensure that you will not pay above a given price in purchasing a stock or sell below a given price in selling a stock.

Accepted Answer

A) True 
 B)False

Question 16

The Nikkei average relates to stock movements in what market?

Accepted Answer

A) Korea 
B) Japan 
C) Austria 
D) Australia 
E) China 
A) Korea 
B) Japan 
C) Austria 
D) Australia 
E) China

Question 17

________________ represents 75% of the total value of firms listed on the NYSE, while ____________________ includes 1,700 individual firms.

Accepted Answer

A) The Dow Jones Industrial Average; Value Line Average 
B) Wilshire 5000; Russell 2000 
C) The Value Line Average; Standard & Poor's Composite 
D) The Dow Jones Composite Average; the Standard & Poor's Industrials 
E) The Standard & Poor's 500 Index; Value Line Average 
A) The Dow Jones Industrial Average; Value Line Average 
B) Wilshire 5000; Russell 2000 
C) The Value Line Average; Standard & Poor's Composite 
D) The Dow Jones Composite Average; the Standard & Poor's Industrials 
E) The Standard & Poor's 500 Index; Value Line Average

Question 18

You can write off up to $5,000 in investment losses in any one year.

Accepted Answer

A) True 
 B)False

Question 19

If a stock is sold short, the equity in the investor's account will go up if the stock

Accepted Answer

A) price goes down. 
B) price goes up. 
C) is split 2 for 1. 
D) A and C 
A) price goes down. 
B) price goes up. 
C) is split 2 for 1. 
D) A and C

Exam 3: Participating in the Market

The Russell 2000 measures performance of the 2000 largest stocks, based on market value.

The success of a short investment position depends on:

A value-weighted index tends to give more importance to large companies than small companies.

An example of an equal-weighted index or average is the:

You buy 100 shares of stock at $40 per share on margin of 40%. If the price of the stock rises to $60 per share, what is your percentage gain in equity? Disregard interest costs.

The Securities and Exchange Commission publishes a list of approved securities that may be borrowed against.

The Dow Jones Industrial Average is not adjusted for stock splits.

If a stock is held for less than 12 months, any gain in value is taxed as ordinary income.

The Dow Jones Industrial Average is a value-weighted index.

When you short a security you are actually selling a security that no one owns.

A change in a high-priced stock's value has a greater impact on the Dow Jones Industrial Average than a change in a low-priced stock.

A margin represents the amount of money an investor may borrow to purchase securities.

The Value Line Average contains stocks from several exchanges or markets.

The following are all value-weighted indexes, except:

A limit order can ensure that you will not pay above a given price in purchasing a stock or sell below a given price in selling a stock.

The Nikkei average relates to stock movements in what market?

________________ represents 75% of the total value of firms listed on the NYSE, while ____________________ includes 1,700 individual firms.

You can write off up to $5,000 in investment losses in any one year.

If a stock is sold short, the equity in the investor's account will go up if the stock

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

represents 75% of the total value of firms listed on the NYSE, while ____ includes 1,700 individual firms.