Question 1

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 B

Question 2

A ____________ requires full payment for the purchase of securities while a _____________ allows the investor to borrow a portion of the purchase price from the brokerage firm.

Accepted Answer

A) Money market account; cash account 
B) Cash account; charge account 
C) Cash account; margin account 
D) Type 5 account; a type 2 account 
A) Money market account; cash account 
B) Cash account; charge account 
C) Cash account; margin account 
D) Type 5 account; a type 2 account C

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

When an investor establishes a position in a security:

Accepted Answer

A) They are said to be long if they purchase the security for their account 
B) They are said to be long if they sell the security for their account 
C) They are said to be short if they sell the security for their account 
D) They are said to be short if they purchase the security for their account 
E) Both a and c 
A) They are said to be long if they purchase the security for their account 
B) They are said to be long if they sell the security for their account 
C) They are said to be short if they sell the security for their account 
D) They are said to be short if they purchase the security for their account 
E) Both a and c

Question 5

Good 'till canceled orders expire automatically after a set period of time.

Accepted Answer

A) True 
 B)False

Question 6

Trading through an online broker is generally cheaper than trading through a discount broker.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT a characteristic of the Dow Jones Industrial Average?

Accepted Answer

A) It includes only very high quality common stock 
B) It generally follows the trend of the market 
C) The companies included,comprise over 25 percent of the companies listed on the New York Stock Exchange 
D) It is a value weighted average 
E) Dividends require adjustments to the divisor 
A) It includes only very high quality common stock 
B) It generally follows the trend of the market 
C) The companies included,comprise over 25 percent of the companies listed on the New York Stock Exchange 
D) It is a value weighted average 
E) Dividends require adjustments to the divisor

Question 8

The Standard and Poor's Midcap Index is composed of 500 middle sized firms.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

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 11

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 12

Lipper Analytical Services is a leading publisher of indexes related to

Accepted Answer

A) Bonds 
B) Foreign equities 
C) Small firms 
D) Mutual funds 
E) Real estate values 
A) Bonds 
B) Foreign equities 
C) Small firms 
D) Mutual funds 
E) Real estate values

Question 13

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 14

Long-term capital gains are taxed at a higher tax rate than dividends.

Accepted Answer

A) True 
 B)False

Question 15

An investor who is in a 33 percent tax bracket for normal (ordinary)income buys a stock for $5,000 and sells it for $9,000.How much will her tax obligation be if she holds the stock for:
(a)6 months
(b)14 months

Accepted Answer

Sales price $9,000 Purchase Pr

Question 16

A stop order is similar to a limit order except that the order turns into a market order once the stop price is hit.

Accepted Answer

A) True 
 B)False

Question 17

Assume the following five companies are used in computing an index

Accepted Answer

\[\begin{array} { c c c c } 
\text { Com

Question 18

Securities must be kept in street name if a margin account is used.

Accepted Answer

A) True 
 B)False

Question 19

The Standard and 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 20

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

Accepted Answer

A) True 
 B)False

Exam 3: Participating in the Market

The success of a "short" investment position depends on

A ____________ requires full payment for the purchase of securities while a _____________ allows the investor to borrow a portion of the purchase price from the brokerage firm.

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

When an investor establishes a position in a security:

Good 'till canceled orders expire automatically after a set period of time.

Trading through an online broker is generally cheaper than trading through a discount broker.

Which of the following is NOT a characteristic of the Dow Jones Industrial Average?

The Standard and Poor's Midcap Index is composed of 500 middle sized firms.

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

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.

Online brokers have become popular because

Lipper Analytical Services is a leading publisher of indexes related to

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

Long-term capital gains are taxed at a higher tax rate than dividends.

An investor who is in a 33 percent tax bracket for normal (ordinary)income buys a stock for $5,000 and sells it for $9,000.How much will her tax obligation be if she holds the stock for: (a)6 months (b)14 months

A stop order is similar to a limit order except that the order turns into a market order once the stop price is hit.

Assume the following five companies are used in computing an index

Securities must be kept in street name if a margin account is used.

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

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

The Investment Setting

Security Markets: Present and Future

Sources of Investment Information

Economic and Industry Analysis

Industry Analysis

Valuation of the Individual Firm

Financial Statement Analysis

A Basic View of Technical Analysis and Market Efficiency

Investment in Special Situations and Anomalies

Bond and Fixed Income Fundamentals

Principles of Bond Valuation and Investment

Duration and Reinvestment Concepts

Convertible Securities and Warrants

Put and Call Options

Commodities and Financial Futures

Stock Index Futures and Options

Mutual Funds

International Securities Markets

Investment in Real Assets

A Basic Look at Portfolio Management and Capital Market Theory

Measuring Risks and Returns of Portfolio Managers

Sustainable Growth Model

a Black Scholes Option Pricing Model

A Comprehensive Analysis for Real Estate Investment Decisions

Unit Investment Trusts Uits

The Makeup of Institutional Investors

Filters

A requires full payment for the purchase of securities while a _ allows the investor to borrow a portion of the purchase price from the brokerage firm.