Question 1

Most commodity futures are traded on the NYSE Amex.

Accepted Answer

A) True 
 B)False

Question 2

The purchase of stock with cash in the hope of earning a capital gain is known as taking a

Accepted Answer

A)  long position in the stock. 
B)  short position in the stock. 
C)  long, margined position in the stock. 
D)  short, margined position in the stock. 
A)  long position in the stock. 
B)  short position in the stock. 
C)  long, margined position in the stock. 
D)  short, margined position in the stock.

Question 3

Which one of the following is a major advantage of margin trading?

Accepted Answer

A)  increase in potential diversification 
B)  increase in potential profits on a percentage basis 
C)  possibility of increased gains on a dollar basis 
D)  interest free loans 
A)  increase in potential diversification 
B)  increase in potential profits on a percentage basis 
C)  possibility of increased gains on a dollar basis 
D)  interest free loans

Question 4

If a security is traded on the New York Stock Exchange and on a regional exchange, the security is said to be

Accepted Answer

A)  dual listed. 
B)  multiple listed. 
C)  traded in the second and third markets. 
D)  geographically diversified. 
A)  dual listed. 
B)  multiple listed. 
C)  traded in the second and third markets. 
D)  geographically diversified.

Question 5

A market where securities are are bought from or sold to a market maker is known as a

Accepted Answer

A)  broker market. 
B)  dealer market. 
C)  exchange floor. 
D)  board of exchange. 
A)  broker market. 
B)  dealer market. 
C)  exchange floor. 
D)  board of exchange.

Question 6

The preliminary version of a prospectus is called a red herring.

Accepted Answer

A) True 
 B)False

Question 7

Exchange traded funds (ETFs)perform like a broad market index but trade are bought and sold like individual stocks.

Accepted Answer

A) True 
 B)False

Question 8

A restricted account is defined as a margin account wherein the equity is

Accepted Answer

A)  less than the initial margin amount. 
B)  greater than the initial margin amount. 
C)  less than the maintenance margin amount. 
D)  greater than the maintenance margin amount. 
A)  less than the initial margin amount. 
B)  greater than the initial margin amount. 
C)  less than the maintenance margin amount. 
D)  greater than the maintenance margin amount.

Question 9

Which one of the following statements concerning the primary market is correct?

Accepted Answer

A)  A transaction in the primary market is between two private stockholders. 
B)  The first public sale of a company's stock in the primary market is called a seasoned new issue. 
C)  The first public sale of a company's stock is called an IPO. 
D)  A rights offering is a direct sale of stock to an institution that participates in the primary market. 
A)  A transaction in the primary market is between two private stockholders. 
B)  The first public sale of a company's stock in the primary market is called a seasoned new issue. 
C)  The first public sale of a company's stock is called an IPO. 
D)  A rights offering is a direct sale of stock to an institution that participates in the primary market.

Question 10

The law that requires investment advisers to register with the SEC is the

Accepted Answer

A)  Investment Company Act of 1940. 
B)  Investment Advisers Act of 1940. 
C)  Maloney Act of 1938. 
D)  Securities Act of 1933. 
A)  Investment Company Act of 1940. 
B)  Investment Advisers Act of 1940. 
C)  Maloney Act of 1938. 
D)  Securities Act of 1933.

Question 11

Stocks and bonds are traded in

Accepted Answer

A)  securities and exchange commissions. 
B)  money markets. 
C)  federal trade commissions. 
D)  capital markets. 
A)  securities and exchange commissions. 
B)  money markets. 
C)  federal trade commissions. 
D)  capital markets.

Question 12

Justin just made a margin purchase of 100 shares of DEF Corp.for $22.50 per share.The initial margin is 70%.The maintenance margin is 30%.How low can the price of each share of DEF be before Justin will have to add equity to his account?

Accepted Answer

A)  $4.73 
B)  $5.25 
C)  $6.75 
D)  $9.64 
A)  $4.73 
B)  $5.25 
C)  $6.75 
D)  $9.64

Question 13

Dollar-denominated debt securities issued by foreign corporations and traded in U.S.markets are called

Accepted Answer

A)  ADRs. 
B)  Yankee bonds. 
C)  ETFs. 
D)  Global bonds. 
A)  ADRs. 
B)  Yankee bonds. 
C)  ETFs. 
D)  Global bonds.

Question 14

The financial markets are becoming more globally integrated.

Accepted Answer

A) True 
 B)False

Question 15

A brokerage firm may set a lower margin requirement than that set by the Federal Reserve Board.

Accepted Answer

A) True 
 B)False

Question 16

The Securities Exchange Act of 1934

Accepted Answer

A)  requires full disclosure of information on all new security issues. 
B)  authorized the SEC to regulate mutual funds. 
C)  established trade associations such as the NASD. 
D)  created the SEC as the regulator of the securities exchanges. 
A)  requires full disclosure of information on all new security issues. 
B)  authorized the SEC to regulate mutual funds. 
C)  established trade associations such as the NASD. 
D)  created the SEC as the regulator of the securities exchanges.

Question 17

Stocks purchased in the secondary market are purchased

Accepted Answer

A)  directly from the issuing corporation. 
B)  from other investors. 
C)  from small, little-known brokerages. 
D)  indirectly through financial institutions. 
A)  directly from the issuing corporation. 
B)  from other investors. 
C)  from small, little-known brokerages. 
D)  indirectly through financial institutions.

Question 18

Which of the following are correct statements concerning the NYSE?
I.Each stock has a designated location, called a post, at which its shares are traded.
II.The NYSE is a dealer market.
III.Supply and demand determines the price of each security.
IV.A specialist buys and sells to maintain a market for a particular security.

Accepted Answer

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

Question 19

The U.S.stock markets tend to produce the highest rate of return each year.

Accepted Answer

A) True 
 B)False

Question 20

Short selling involves the sale of depreciated stock at a price below the amount borrowed on margin.

Accepted Answer

A) True 
 B)False

Most commodity futures are traded on the NYSE Amex.

The purchase of stock with cash in the hope of earning a capital gain is known as taking a

Which one of the following is a major advantage of margin trading?

If a security is traded on the New York Stock Exchange and on a regional exchange, the security is said to be

A market where securities are are bought from or sold to a market maker is known as a

The preliminary version of a prospectus is called a red herring.

Exchange traded funds (ETFs)perform like a broad market index but trade are bought and sold like individual stocks.

A restricted account is defined as a margin account wherein the equity is

Which one of the following statements concerning the primary market is correct?

The law that requires investment advisers to register with the SEC is the

Stocks and bonds are traded in

Justin just made a margin purchase of 100 shares of DEF Corp.for $22.50 per share.The initial margin is 70%.The maintenance margin is 30%.How low can the price of each share of DEF be before Justin will have to add equity to his account?

Dollar-denominated debt securities issued by foreign corporations and traded in U.S.markets are called

The financial markets are becoming more globally integrated.

A brokerage firm may set a lower margin requirement than that set by the Federal Reserve Board.

The Securities Exchange Act of 1934

Stocks purchased in the secondary market are purchased

The U.S.stock markets tend to produce the highest rate of return each year.

Short selling involves the sale of depreciated stock at a price below the amount borrowed on margin.

The Investment Environment

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency, Behavioral Finance, and Technical Analysis

Fixed-Income Securities

Bond Valuation

Mutual Funds: Professionally Managed Portfolios

Managing Your Own Portfolios

Options: Puts and Calls

Commodities and Financial Futures

Filters

Exam 2: Securities Markets and Transactions

Most commodity futures are traded on the NYSE Amex.

The purchase of stock with cash in the hope of earning a capital gain is known as taking a

Which one of the following is a major advantage of margin trading?

If a security is traded on the New York Stock Exchange and on a regional exchange, the security is said to be

A market where securities are are bought from or sold to a market maker is known as a

The preliminary version of a prospectus is called a red herring.

Exchange traded funds (ETFs)perform like a broad market index but trade are bought and sold like individual stocks.

A restricted account is defined as a margin account wherein the equity is

Which one of the following statements concerning the primary market is correct?

The law that requires investment advisers to register with the SEC is the

Stocks and bonds are traded in

Justin just made a margin purchase of 100 shares of DEF Corp.for $22.50 per share.The initial margin is 70%.The maintenance margin is 30%.How low can the price of each share of DEF be before Justin will have to add equity to his account?

Dollar-denominated debt securities issued by foreign corporations and traded in U.S.markets are called

The financial markets are becoming more globally integrated.

A brokerage firm may set a lower margin requirement than that set by the Federal Reserve Board.

The Securities Exchange Act of 1934

Stocks purchased in the secondary market are purchased

The U.S.stock markets tend to produce the highest rate of return each year.

Short selling involves the sale of depreciated stock at a price below the amount borrowed on margin.

The Investment Environment

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency, Behavioral Finance, and Technical Analysis

Fixed-Income Securities

Bond Valuation

Mutual Funds: Professionally Managed Portfolios

Managing Your Own Portfolios

Options: Puts and Calls

Commodities and Financial Futures

Filters