Question 1

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 2

In a recent IPO, the Sausage Co. offered 1.6 million shares of stock at an offer price of $18 a share. The underwriting was conducted on a best efforts basis with a spread of 7.0 percent. The Sausage Co. received a total of $25,079,868.00 in sale proceeds. How many shares were sold?

Accepted Answer

A)  1,378,700 shares 
B)  1,486,500 shares 
C)  1,498,200 shares 
D)  1,505,700 shares 
E)  1,508,400 shares 
A)  1,378,700 shares 
B)  1,486,500 shares 
C)  1,498,200 shares 
D)  1,505,700 shares 
E)  1,508,400 shares

Question 3

A price-weighted index consists of stocks A, B, and C which are priced at $38, $21, and $26 a share, respectively. The current index divisor is 2.7. What will the new index divisor be if stock B undergoes a 3-for-1 stock split?

Accepted Answer

A)  2.1684 
B)  2.2553 
C)  2.5890 
D)  2.7000 
E)  3.1447 
A)  2.1684 
B)  2.2553 
C)  2.5890 
D)  2.7000 
E)  3.1447

Question 4

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 5

Alco Metals just sold 2.7 million shares through an IPO offering. The shares were offered at $21 a share and all shares were sold. The firm received a total of $60,385,500 for this issue. What was the spread?

Accepted Answer

A)  5.50 percent 
B)  6.25 percent 
C)  6.50 percent 
D)  7.00 percent 
E)  7.25 percent 
A)  5.50 percent 
B)  6.25 percent 
C)  6.50 percent 
D)  7.00 percent 
E)  7.25 percent

Question 6

In 2007, NYSE Holdings merged with which one of the following?

Accepted Answer

A)  NASDAQ 
B)  AMEX 
C)  Chicago Stock Exchange 
D)  London Stock Exchange 
E)  Euronext, N.V. 
A)  NASDAQ 
B)  AMEX 
C)  Chicago Stock Exchange 
D)  London Stock Exchange 
E)  Euronext, N.V.

Question 7

An index consists of the following securities and has an index divisor of 3.0. What is the price- weighted index return?

Accepted Answer

A)  9.87 percent 
B)  10.35 percent 
C)  11.54 percent 
D)  12.33 percent 
E)  13.00 percent 
A)  9.87 percent 
B)  10.35 percent 
C)  11.54 percent 
D)  12.33 percent 
E)  13.00 percent

Question 8

Which of the following types of indexes is a stock market index in which stocks are held in proportion to their share price?

Accepted Answer

A)  balanced 
B)  market-weighted 
C)  dollar-weighted 
D)  price-weighted 
E)  value-weighted 
A)  balanced 
B)  market-weighted 
C)  dollar-weighted 
D)  price-weighted 
E)  value-weighted

Question 9

A preliminary document provided to investors who are interested in a stock offering is called a(n):

Accepted Answer

A)  prospectus. 
B)  inquiry form. 
C)  draft offer. 
D)  green shoe. 
E)  red herring. 
A)  prospectus. 
B)  inquiry form. 
C)  draft offer. 
D)  green shoe. 
E)  red herring.

Question 10

Trevor currently owns 545,000 shares of ABC stock. He will sell those shares for $17.10 a share. He is also willing to purchase additional shares for $17.07 a share. Trevor is a securities:

Accepted Answer

A)  broker. 
B)  representative. 
C)  underwriter. 
D)  floor broker. 
E)  dealer. 
A)  broker. 
B)  representative. 
C)  underwriter. 
D)  floor broker. 
E)  dealer.

Question 11

Stocks which are listed on the NYSE can:

Accepted Answer

A)  not be listed on any other exchange. 
B)  only be dual listed on a regional exchange. 
C)  only be dual listed on Instinet. 
D)  only be dual listed on the Archipelago Exchange. 
E)  also be listed on NASDAQ. 
A)  not be listed on any other exchange. 
B)  only be dual listed on a regional exchange. 
C)  only be dual listed on Instinet. 
D)  only be dual listed on the Archipelago Exchange. 
E)  also be listed on NASDAQ.

Question 12

An NYSE Supplemental Liquidity Provider: I. can trade the same stocks as designated market makers
II) can trade only from offices outside the exchange
III) must quote bid or ask quotes a certain % of the day
IV) are paid 30 cents per 100 shares traded

Accepted Answer

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

Question 13

Which one of the following statements is correct regarding the NYSE uptick rule?

Accepted Answer

A)  The rule prevents any further selling of shares when the last sale was an uptick. 
B)  The rule prevents any further selling of shares when the last sale was a downtick. 
C)  The rule prevents short-selling except following an uptick. 
D)  The rule prevents short-selling except following a downtick. 
E)  The rule was recently adopted to limit market volatility. 
A)  The rule prevents any further selling of shares when the last sale was an uptick. 
B)  The rule prevents any further selling of shares when the last sale was a downtick. 
C)  The rule prevents short-selling except following an uptick. 
D)  The rule prevents short-selling except following a downtick. 
E)  The rule was recently adopted to limit market volatility.

Question 14

A NYSE member who trades only for his or her own account is called a(n):

Accepted Answer

A)  floor trader. 
B)  specialist. 
C)  individual broker. 
D)  floor broker. 
E)  house broker. 
A)  floor trader. 
B)  specialist. 
C)  individual broker. 
D)  floor broker. 
E)  house broker.

Question 15

When the price of newly issued shares is determined by competitive bidding the underwriting is known as a _____ underwriting.

Accepted Answer

A)  Dutch auction 
B)  market-priced 
C)  seasoned 
D)  best efforts 
E)  rights 
A)  Dutch auction 
B)  market-priced 
C)  seasoned 
D)  best efforts 
E)  rights

Question 16

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 17

The orders displayed on NASDAQ are placed by:

Accepted Answer

A)  individuals on ECNs only. 
B)  market makers only. 
C)  both market makers and individuals on ECNs. 
D)  brokerage firms. 
E)  floor brokers. 
A)  individuals on ECNs only. 
B)  market makers only. 
C)  both market makers and individuals on ECNs. 
D)  brokerage firms. 
E)  floor brokers.

Question 18

Which one of the following statements concerning venture capital is correct?

Accepted Answer

A)  Venture capital is frequently provided in stages with each stage financed by a different venture capitalist. 
B)  Most venture capitalists are passive investors. 
C)  The founders of a firm generally realize substantial payoffs as soon as the firm receives venture financing. 
D)  Venture capitalists generally compete with banks to find projects to finance. 
E)  Well established firms tend to absorb most of the available venture capital. 
A)  Venture capital is frequently provided in stages with each stage financed by a different venture capitalist. 
B)  Most venture capitalists are passive investors. 
C)  The founders of a firm generally realize substantial payoffs as soon as the firm receives venture financing. 
D)  Venture capitalists generally compete with banks to find projects to finance. 
E)  Well established firms tend to absorb most of the available venture capital.

Question 19

A securities dealer is a(n):

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 20

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

Accepted Answer

The primary advantage of a limit sell or

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

In a recent IPO, the Sausage Co. offered 1.6 million shares of stock at an offer price of $18 a share. The underwriting was conducted on a best efforts basis with a spread of 7.0 percent. The Sausage Co. received a total of $25,079,868.00 in sale proceeds. How many shares were sold?

A price-weighted index consists of stocks A, B, and C which are priced at $38, $21, and $26 a share, respectively. The current index divisor is 2.7. What will the new index divisor be if stock B undergoes a 3-for-1 stock split?

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?

Alco Metals just sold 2.7 million shares through an IPO offering. The shares were offered at $21 a share and all shares were sold. The firm received a total of $60,385,500 for this issue. What was the spread?

In 2007, NYSE Holdings merged with which one of the following?

An index consists of the following securities and has an index divisor of 3.0. What is the price- weighted index return?

Which of the following types of indexes is a stock market index in which stocks are held in proportion to their share price?

A preliminary document provided to investors who are interested in a stock offering is called a(n):

Trevor currently owns 545,000 shares of ABC stock. He will sell those shares for $17.10 a share. He is also willing to purchase additional shares for $17.07 a share. Trevor is a securities:

Stocks which are listed on the NYSE can:

An NYSE Supplemental Liquidity Provider: I. can trade the same stocks as designated market makers II) can trade only from offices outside the exchange III) must quote bid or ask quotes a certain % of the day IV) are paid 30 cents per 100 shares traded

Which one of the following statements is correct regarding the NYSE uptick rule?

A NYSE member who trades only for his or her own account is called a(n):

When the price of newly issued shares is determined by competitive bidding the underwriting is known as a _____ underwriting.

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?

The orders displayed on NASDAQ are placed by:

Which one of the following statements concerning venture capital is correct?

A securities dealer is a(n):

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

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 Bonds

Government Bonds

Mortgage-Backed Securities

Filters

Exam 5: The Stock Market

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

In a recent IPO, the Sausage Co. offered 1.6 million shares of stock at an offer price of $18 a share. The underwriting was conducted on a best efforts basis with a spread of 7.0 percent. The Sausage Co. received a total of $25,079,868.00 in sale proceeds. How many shares were sold?

A price-weighted index consists of stocks A, B, and C which are priced at $38, $21, and $26 a share, respectively. The current index divisor is 2.7. What will the new index divisor be if stock B undergoes a 3-for-1 stock split?

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?

Alco Metals just sold 2.7 million shares through an IPO offering. The shares were offered at $21 a share and all shares were sold. The firm received a total of $60,385,500 for this issue. What was the spread?

In 2007, NYSE Holdings merged with which one of the following?

An index consists of the following securities and has an index divisor of 3.0. What is the price- weighted index return?

Which of the following types of indexes is a stock market index in which stocks are held in proportion to their share price?

A preliminary document provided to investors who are interested in a stock offering is called a(n):

Trevor currently owns 545,000 shares of ABC stock. He will sell those shares for $17.10 a share. He is also willing to purchase additional shares for $17.07 a share. Trevor is a securities:

Stocks which are listed on the NYSE can:

An NYSE Supplemental Liquidity Provider: I. can trade the same stocks as designated market makers II) can trade only from offices outside the exchange III) must quote bid or ask quotes a certain % of the day IV) are paid 30 cents per 100 shares traded

Which one of the following statements is correct regarding the NYSE uptick rule?

A NYSE member who trades only for his or her own account is called a(n):

When the price of newly issued shares is determined by competitive bidding the underwriting is known as a _____ underwriting.

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?

The orders displayed on NASDAQ are placed by:

Which one of the following statements concerning venture capital is correct?

A securities dealer is a(n):

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

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 Bonds

Government Bonds

Mortgage-Backed Securities

Filters