Exam 3: How Securities Are Traded

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.

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?

Assume you sold short 100 shares of common stock at $40 per share. The initial margin is 50%. What would be the maintenance margin if a margin call is made at a stock price of $50?

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.

Shelf registration

The cost of buying and selling a stock consists of

Assume you sell short 100 shares of common stock at $30 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $35 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 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 above a specified price?

The securities act of 1933 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.

Shares for short transactions

You want to purchase XON stock at $60 from your broker using as little of your own money as possible. If initial margin is 50% and you have $3,000 to invest, how many shares can you buy?

You purchased 300 shares of common stock on margin for $60 per share. The initial margin is 60%, and the stock pays no dividend. What would your rate of return be if you sell the stock at $45 per share? Ignore interest on margin.

You purchased 100 shares of XON common stock on margin at $60 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

Firms raise capital by issuing stock

Initial margin requirements are determined by

The trading of stock that was previously issued takes place

All of the following are considered new trading strategies, except