Question 1

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 2

The Wilshire 5000 index includes all stocks on the New York and American Stock Exchanges and most active Nasdaq issues.

Accepted Answer

A) True 
 B)False

Question 3

A stop order is similar to a limit order,except that once the set price is reached the stop order

Accepted Answer

A) Is executed after all limit orders at the same price 
B) Becomes a limit order 
C) Goes to the end of the execution cue 
D) Immediately becomes a market order. 
A) Is executed after all limit orders at the same price 
B) Becomes a limit order 
C) Goes to the end of the execution cue 
D) Immediately becomes a market order.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Stocks may be used to satisfy margin requirements rather than cash.

Accepted Answer

A) True 
 B)False

Question 6

The margin requirement is used in selling stock.

Accepted Answer

A) True 
 B)False

Question 7

The tax rate that is simply the amount of taxes paid divided by taxable income is

Accepted Answer

A) Marginal tax rate 
B) Average tax rate 
C) Short-term capital gains tax rate 
D) Long-term capital gains tax rate 
A) Marginal tax rate 
B) Average tax rate 
C) Short-term capital gains tax rate 
D) Long-term capital gains tax rate

Question 8

The Dow Jones Industrial Average is not the most accurate market measure,because of its blue chip stock composition,and its bias toward high priced stocks.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following are features of margin accounts?

Accepted Answer

A) They leverage returns,i.e.magnify the size of a gain or loss 
B) You must put up part of the purchase price in cash or other securities 
C) Purchased securities are not delivered to the investor 
D) The percentage of the total cost the investor must pay is set by the Federal Reserve Board 
E) All of the above are features 
A) They leverage returns,i.e.magnify the size of a gain or loss 
B) You must put up part of the purchase price in cash or other securities 
C) Purchased securities are not delivered to the investor 
D) The percentage of the total cost the investor must pay is set by the Federal Reserve Board 
E) All of the above are features

Question 10

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

Accepted Answer

Change in equity /in

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The minimum holding period to qualify for the long-term capital gains treatment is

Accepted Answer

A) 1 month 
B) 12 months 
C) 18 months 
D) 24 months 
E) 36 months 
A) 1 month 
B) 12 months 
C) 18 months 
D) 24 months 
E) 36 months

Question 13

Performance in the bond market is usually gauged by

Accepted Answer

A) Indexes and averages 
B) Interest rate movements 
C) Yield curve changes 
D) B and C 
A) Indexes and averages 
B) Interest rate movements 
C) Yield curve changes 
D) B and C

Question 14

Novice investors should consider using full-service brokers.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is NOT a characteristic of the Wilshire 5000 Equity Index?

Accepted Answer

A) It is most frequently used by individual investors 
B) It represents the total dollar value of 5000 stocks on a value weighted basis 
C) It contains all NYSE and AMEX issues,and most active NASDAQ issues 
D) It is used as a measure of the broadest market performance index 
E) It is a value-weighted index 
A) It is most frequently used by individual investors 
B) It represents the total dollar value of 5000 stocks on a value weighted basis 
C) It contains all NYSE and AMEX issues,and most active NASDAQ issues 
D) It is used as a measure of the broadest market performance index 
E) It is a value-weighted index

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The difference between a cash account and a margin account is:

Accepted Answer

A) A margin account allows the investor up to five days to pay for the entire purchase 
B) A cash account gives the investor a 2% discount if they pay with in 10 days,or the investor has to pay the entire amount with in thirty days (2/10 net 30) 
C) A margin account allows the investor to borrow a percentage of the purchase price from the brokerage firm 
D) A margin account is less risky to the investor 
E) a cash account requires the stock be kept registered in street name,a margin account allows the securities to be delivered to the customer. 
A) A margin account allows the investor up to five days to pay for the entire purchase 
B) A cash account gives the investor a 2% discount if they pay with in 10 days,or the investor has to pay the entire amount with in thirty days (2/10 net 30) 
C) A margin account allows the investor to borrow a percentage of the purchase price from the brokerage firm 
D) A margin account is less risky to the investor 
E) a cash account requires the stock be kept registered in street name,a margin account allows the securities to be delivered to the customer.

Question 18

For investors putting their funds in tax deferred accounts,the capital gains provisions of the Taxpayer Relief Act of 1997 are irrelevant.

Accepted Answer

A) True 
 B)False

Question 19

The division in the Dow Jones Industrial average equals 30.

Accepted Answer

A) True 
 B)False

Question 20

The Nikkei 225 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

Exam 3: Participating in the Market

An example of an equal weighted index or average is the

The Wilshire 5000 index includes all stocks on the New York and American Stock Exchanges and most active Nasdaq issues.

A stop order is similar to a limit order,except that once the set price is reached the stop order

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

Stocks may be used to satisfy margin requirements rather than cash.

The margin requirement is used in selling stock.

The tax rate that is simply the amount of taxes paid divided by taxable income is

The Dow Jones Industrial Average is not the most accurate market measure,because of its blue chip stock composition,and its bias toward high priced stocks.

Which of the following are features of margin accounts?

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

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

The minimum holding period to qualify for the long-term capital gains treatment is

Performance in the bond market is usually gauged by

Novice investors should consider using full-service brokers.

Which of the following is NOT a characteristic of the Wilshire 5000 Equity Index?

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

The difference between a cash account and a margin account is:

For investors putting their funds in tax deferred accounts,the capital gains provisions of the Taxpayer Relief Act of 1997 are irrelevant.

The division in the Dow Jones Industrial average equals 30.

The Nikkei 225 average relates to stock movements in what market?

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