Question 1

DT Metals is offering 700 shares in a Dutch auction IPO.The following bids have been received:   What will the gross proceeds be for this offering?

Accepted Answer

A) $12,000 
B) $12,600 
C) $13,200 
D) $13,300 
E) $14,700 
A) $12,000 
B) $12,600 
C) $13,200 
D) $13,300 
E) $14,700

Question 2

Which one of the following best describes a broker?

Accepted Answer

A) intermediary who arranges trades between a buyer and a seller 
B) trader who buys and sells from his or her inventory 
C) firm which charges a commission for arranging a transaction 
D) person who buys securities for his or her own account on an exchange floor 
E) trader who transacts business on behalf of a securities issuer 
A) intermediary who arranges trades between a buyer and a seller 
B) trader who buys and sells from his or her inventory 
C) firm which charges a commission for arranging a transaction 
D) person who buys securities for his or her own account on an exchange floor 
E) trader who transacts business on behalf of a securities issuer

Question 3

An index consists of the following securities.What is the value-weighted index return?

Accepted Answer

A) -0.43 percent 
B) -1.46 percent 
C) 4.43 percent 
D) 4.51 percent 
E) 4.62 percent 
A) -0.43 percent 
B) -1.46 percent 
C) 4.43 percent 
D) 4.51 percent 
E) 4.62 percent

Question 4

An order book displays the following information:   You place a market order to buy 100 shares.At what price will your order be executed?

Accepted Answer

A) $18.13 
B) $18.14 
C) $18.16 
D) $18.17 
E) $18.18 
A) $18.13 
B) $18.14 
C) $18.16 
D) $18.17 
E) $18.18

Question 5

You have the following information:   You want the beginning price-weighted index of these two stocks to be 100.Given this,what is the ending index value?

Accepted Answer

A) 93.44 
B) 98.10 
C) 107.02 
D) 108.36 
E) 110.40 
A) 93.44 
B) 98.10 
C) 107.02 
D) 108.36 
E) 110.40

Question 6

Kelly wants to sell 600 shares of DeLux stock at the going market price after the stock reaches $42 a share.Which type of order should she place?

Accepted Answer

A) stop 
B) limit 
C) market 
D) fixed 
E) loss 
A) stop 
B) limit 
C) market 
D) fixed 
E) loss

Question 7

ML Underwriters paid an issuer $37,694,528 as IPO proceeds.The IPO offered 1.86 million shares of which 1.835 million were sold at an offer price of $21.85 a share.The underwriting spread was 7.25 percent.What type of underwriting was this?

Accepted Answer

A) best efforts 
B) variable 
C) firm commitment 
D) plain vanilla 
E) stand-by 
A) best efforts 
B) variable 
C) firm commitment 
D) plain vanilla 
E) stand-by

Question 8

Which one of the following is the primary flaw of a price-weighted index?

Accepted Answer

A) Price-weighted indexes ignore stock splits which affect stock prices. 
B) The effect a company has on the index is dependent solely on the price per share. 
C) Only a small number of stocks can be included in a price-weighted index. 
D) If the number of shares outstanding of an index stock changes, the index divisor must be recomputed. 
E) The index can only be computed once the trading day is over. 
A) Price-weighted indexes ignore stock splits which affect stock prices. 
B) The effect a company has on the index is dependent solely on the price per share. 
C) Only a small number of stocks can be included in a price-weighted index. 
D) If the number of shares outstanding of an index stock changes, the index divisor must be recomputed. 
E) The index can only be computed once the trading day is over.

Question 9

NASDAQ has which of the following characteristics?
I.trading floor
II.computer network
III.specialist system
IV.multiple market makers

Accepted Answer

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

Question 10

When stocks are held in an index in proportion to their total company market value,the index is:

Accepted Answer

A) dollar-weighted. 
B) front-weighted. 
C) back-weighted. 
D) price-weighted. 
E) value-weighted. 
A) dollar-weighted. 
B) front-weighted. 
C) back-weighted. 
D) price-weighted. 
E) value-weighted.

Question 11

Marcus just placed a stop limit order to sell 100 shares at $21 stop,$18 limit.Which one of the following statements is correct concerning this order if the current market price is $16?

Accepted Answer

A) As soon as the price rises to $18, the stock will be sold. 
B) The stock will sell for at least $18 but less than $21. 
C) The stock will sell for $18 a share as soon as the price hits $21. 
D) The order will become a limit order to sell at $21 once the market price reaches $18. 
E) The order will become a limit order to sell at $18 once the market price reaches $21. 
A) As soon as the price rises to $18, the stock will be sold. 
B) The stock will sell for at least $18 but less than $21. 
C) The stock will sell for $18 a share as soon as the price hits $21. 
D) The order will become a limit order to sell at $21 once the market price reaches $18. 
E) The order will become a limit order to sell at $18 once the market price reaches $21.

Question 12

An order to sell that involves a preset trigger point is called a _____ order.

Accepted Answer

A) limit 
B) day 
C) stop 
D) short 
E) market 
A) limit 
B) day 
C) stop 
D) short 
E) market

Question 13

Which one of the following statements related to stock indexes is correct?

Accepted Answer

A) The index divisor increases in value whenever a stock in the index undergoes a stock split. 
B) A value-weighted index includes both dividends and capital gains. 
C) The S&P 500 index is value-weighted. 
D) The DJIA is value-weighted. 
E) Index staleness is more apt to be a problem for the DJIA than for the Wilshire 5000. 
A) The index divisor increases in value whenever a stock in the index undergoes a stock split. 
B) A value-weighted index includes both dividends and capital gains. 
C) The S&P 500 index is value-weighted. 
D) The DJIA is value-weighted. 
E) Index staleness is more apt to be a problem for the DJIA than for the Wilshire 5000.

Question 14

An order book displays the following information:   You place an order to sell 100 shares.At what price will your order be executed?

Accepted Answer

A) $18.05 
B) $18.06 
C) $18.07 
D) $18.11 
E) $18.12 
A) $18.05 
B) $18.06 
C) $18.07 
D) $18.11 
E) $18.12

Question 15

Which one of the following statements concerning the NYSE is correct?

Accepted Answer

A) The NYSE was created based on the Walnut Tree Agreement. 
B) The average daily trading volume on the NYSE in 2007 was approximately one billion shares. 
C) The NYSE and NASDAQ merged in 2007. 
D) The NYSE is part of a firm that also operates a stock exchange in Amsterdam. 
E) The NYSE merged with NASDAQ in 2007. 
A) The NYSE was created based on the Walnut Tree Agreement. 
B) The average daily trading volume on the NYSE in 2007 was approximately one billion shares. 
C) The NYSE and NASDAQ merged in 2007. 
D) The NYSE is part of a firm that also operates a stock exchange in Amsterdam. 
E) The NYSE merged with NASDAQ in 2007.

Question 16

The stocks listed on the Pink Sheets:

Accepted Answer

A) are those stocks trading on the NASDAQ CAPITAL MARKET. 
B) do not have to file financial statements with the SEC. 
C) have all been delisted by the NYSE. 
D) are the highest priced stocks listed on NASDAQ. 
E) must file financial statements with the SEC but do not have to meet any listing requirements. 
A) are those stocks trading on the NASDAQ CAPITAL MARKET. 
B) do not have to file financial statements with the SEC. 
C) have all been delisted by the NYSE. 
D) are the highest priced stocks listed on NASDAQ. 
E) must file financial statements with the SEC but do not have to meet any listing requirements.

Question 17

Faith placed an order to sell 7,500 shares of stock she currently owned.As soon as the order reached the trading floor,the shares were immediately sold.Which type of order did Faith place?

Accepted Answer

A) limit 
B) day 
C) market 
D) short 
E) stop 
A) limit 
B) day 
C) market 
D) short 
E) stop

Question 18

A price-weighted index consists of stocks A,B,and C which are priced at $27,$11,and $18 a share,respectively.The current index divisor is 2.24.If stock B undergoes a 1-for-3 reverse stock split,the new index divisor will be:

Accepted Answer

A) 1.9467. 
B) 2.1806. 
C) 2.2000. 
D) 3.0842. 
E) 3.1200. 
A) 1.9467. 
B) 2.1806. 
C) 2.2000. 
D) 3.0842. 
E) 3.1200.

Question 19

A price-weighted index consists of stocks A,B,and C which are priced at $50,$35,and $15 a share,respectively.The current index divisor is 2.75.What will the new index advisor be if stock A undergoes a 5-for-1 stock split?

Accepted Answer

A) 0.40 
B) 0.65 
C) 1.00 
D) 1.65 
E) 1.85 
A) 0.40 
B) 0.65 
C) 1.00 
D) 1.65 
E) 1.85

Question 20

Describe the primary advantage and disadvantage of a limit sell order.

Accepted Answer

The primary advantage of a limit sell or

DT Metals is offering 700 shares in a Dutch auction IPO.The following bids have been received: What will the gross proceeds be for this offering?

Which one of the following best describes a broker?

An index consists of the following securities.What is the value-weighted index return?

An order book displays the following information: You place a market order to buy 100 shares.At what price will your order be executed?

You have the following information: You want the beginning price-weighted index of these two stocks to be 100.Given this,what is the ending index value?

Kelly wants to sell 600 shares of DeLux stock at the going market price after the stock reaches $42 a share.Which type of order should she place?

ML Underwriters paid an issuer $37,694,528 as IPO proceeds.The IPO offered 1.86 million shares of which 1.835 million were sold at an offer price of $21.85 a share.The underwriting spread was 7.25 percent.What type of underwriting was this?

Which one of the following is the primary flaw of a price-weighted index?

NASDAQ has which of the following characteristics? I.trading floor II.computer network III.specialist system IV.multiple market makers

When stocks are held in an index in proportion to their total company market value,the index is:

Marcus just placed a stop limit order to sell 100 shares at $21 stop,$18 limit.Which one of the following statements is correct concerning this order if the current market price is $16?

An order to sell that involves a preset trigger point is called a _____ order.

Which one of the following statements related to stock indexes is correct?

An order book displays the following information: You place an order to sell 100 shares.At what price will your order be executed?

Which one of the following statements concerning the NYSE is correct?

The stocks listed on the Pink Sheets:

Faith placed an order to sell 7,500 shares of stock she currently owned.As soon as the order reached the trading floor,the shares were immediately sold.Which type of order did Faith place?

A price-weighted index consists of stocks A,B,and C which are priced at $27,$11,and $18 a share,respectively.The current index divisor is 2.24.If stock B undergoes a 1-for-3 reverse stock split,the new index divisor will be:

A price-weighted index consists of stocks A,B,and C which are priced at $50,$35,and $15 a share,respectively.The current index divisor is 2.75.What will the new index advisor be if stock A undergoes a 5-for-1 stock split?

Describe the primary advantage and disadvantage of a limit sell order.

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Projecting Cash Flow and Earnings

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Exam 5: The Stock Market

DT Metals is offering 700 shares in a Dutch auction IPO.The following bids have been received: What will the gross proceeds be for this offering?

Which one of the following best describes a broker?

An index consists of the following securities.What is the value-weighted index return?

An order book displays the following information: You place a market order to buy 100 shares.At what price will your order be executed?

You have the following information: You want the beginning price-weighted index of these two stocks to be 100.Given this,what is the ending index value?

Kelly wants to sell 600 shares of DeLux stock at the going market price after the stock reaches $42 a share.Which type of order should she place?

ML Underwriters paid an issuer $37,694,528 as IPO proceeds.The IPO offered 1.86 million shares of which 1.835 million were sold at an offer price of $21.85 a share.The underwriting spread was 7.25 percent.What type of underwriting was this?

Which one of the following is the primary flaw of a price-weighted index?

NASDAQ has which of the following characteristics? I.trading floor II.computer network III.specialist system IV.multiple market makers

When stocks are held in an index in proportion to their total company market value,the index is:

Marcus just placed a stop limit order to sell 100 shares at $21 stop,$18 limit.Which one of the following statements is correct concerning this order if the current market price is $16?

An order to sell that involves a preset trigger point is called a _____ order.

Which one of the following statements related to stock indexes is correct?

An order book displays the following information: You place an order to sell 100 shares.At what price will your order be executed?

Which one of the following statements concerning the NYSE is correct?

The stocks listed on the Pink Sheets:

Faith placed an order to sell 7,500 shares of stock she currently owned.As soon as the order reached the trading floor,the shares were immediately sold.Which type of order did Faith place?

A price-weighted index consists of stocks A,B,and C which are priced at $27,$11,and $18 a share,respectively.The current index divisor is 2.24.If stock B undergoes a 1-for-3 reverse stock split,the new index divisor will be:

A price-weighted index consists of stocks A,B,and C which are priced at $50,$35,and $15 a share,respectively.The current index divisor is 2.75.What will the new index advisor be if stock A undergoes a 5-for-1 stock split?

Describe the primary advantage and disadvantage of a limit sell order.

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Projecting Cash Flow and Earnings

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters