Question 1

Which one of the following statements about the NYSE is correct?

Accepted Answer

A)  Each member of the exchange owns a trading post. 
B)  Any listed stock may be traded at any of 20 trading posts. 
C)  Brokerage firms are only permitted to have one individual trading on the floor of the exchange. 
D)  Buy orders are filled at the lowest price and sell orders are filled at the highest price. 
A)  Each member of the exchange owns a trading post. 
B)  Any listed stock may be traded at any of 20 trading posts. 
C)  Brokerage firms are only permitted to have one individual trading on the floor of the exchange. 
D)  Buy orders are filled at the lowest price and sell orders are filled at the highest price.

Question 2

The Securities Act of 1933 deals mostly with primary markets.

Accepted Answer

A) True 
 B)False

Question 3

Maintenance margin is the

Accepted Answer

A)  minimum amount of loan that can be used for margin trading. 
B)  initial amount of equity required for a margin purchase. 
C)  minimum amount of equity that an investor can have to avoid a margin call. 
D)  amount of additional funds that need to be added to an account to meet minimal equity requirements. 
A)  minimum amount of loan that can be used for margin trading. 
B)  initial amount of equity required for a margin purchase. 
C)  minimum amount of equity that an investor can have to avoid a margin call. 
D)  amount of additional funds that need to be added to an account to meet minimal equity requirements.

Question 4

Including foreign investments in a portfolio

Accepted Answer

A)  decreases the overall diversification of the portfolio. 
B)  reduces the potential rate of return. 
C)  provides potential benefits from changes in currency values. 
D)  limits the diversification amongst industries. 
A)  decreases the overall diversification of the portfolio. 
B)  reduces the potential rate of return. 
C)  provides potential benefits from changes in currency values. 
D)  limits the diversification amongst industries.

Question 5

The primary market for futures is the

Accepted Answer

A)  Kansas City Board of Trade. 
B)  New York Mercantile Exchange. 
C)  Chicago Board of Trade. 
D)  Chicago Board Options Exchange. 
A)  Kansas City Board of Trade. 
B)  New York Mercantile Exchange. 
C)  Chicago Board of Trade. 
D)  Chicago Board Options Exchange.

Question 6

An investment in which of the following represents an direct foreign investment?
I.Global mutual fund
II.U.S.multinational firm
III.ADR
IV.Foreign security

Accepted Answer

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

Question 7

Which of the following practices is prohibited by the Insider Trading and Fraud Act of 1988.

Accepted Answer

A)  the use of nonpublic information to make profitable stock transactions. 
B)  selling of stock by officers of the company. 
C)  the granting of stock options to corporate executives in lieu of salaries. 
D)  private sales of stock between executives of the company. 
A)  the use of nonpublic information to make profitable stock transactions. 
B)  selling of stock by officers of the company. 
C)  the granting of stock options to corporate executives in lieu of salaries. 
D)  private sales of stock between executives of the company.

Question 8

Assume the foreign exchange rate for the euro was US $1.00 = .70 euro last month.This month, the exchange rate is US $1.00 = .72 euro.This information indicates that over the past month the

Accepted Answer

A)  US dollar remained unchanged relative to the euro. 
B)  US dollar appreciated relative to all foreign currencies. 
C)  euro appreciated relative to the dollar. 
D)  euro depreciated relative to the dollar. 
A)  US dollar remained unchanged relative to the euro. 
B)  US dollar appreciated relative to all foreign currencies. 
C)  euro appreciated relative to the dollar. 
D)  euro depreciated relative to the dollar.

Question 9

Describe the initial public offering (IPO)process and explain the role of the underwriter, the Securities and Exchange Commission (SEC), and the red herring.

Accepted Answer

The underwriter is responsible for promo

Question 10

Megan bought 200 shares of stock at a price of $10 a share.She used her 70% margin account to make the purchase.Megan sold her stock after a year for $12 a share.Ignoring margin interest and trading costs, what is Megan's return on investor's equity for this investment?

Accepted Answer

A)  67% 
B)  29% 
C)  14% 
D)  10% 
A)  67% 
B)  29% 
C)  14% 
D)  10%

Question 11

The NYSE has listing requirements that include a minimum
I.number of outstanding shares.
II.amount of pre-tax earnings.
III.market value of publicly held shares.
IV.number of shareholders owning 100 shares or more.

Accepted Answer

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

Question 12

Investment bankers who join together to share the financial risk associated with buying an entire issue of new securities and reselling them to the public is called a(n)

Accepted Answer

A)  selling group. 
B)  tombstone group. 
C)  underwriting syndicate. 
D)  primary market group. 
A)  selling group. 
B)  tombstone group. 
C)  underwriting syndicate. 
D)  primary market group.

Question 13

Which of the following are associated with bear markets?
I.investor pessimism
II.rising profits
III.economic slowdown
IV.rising security prices

Accepted Answer

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

Question 14

Amber sells short 100 shares of MNOP stock at $62.50 per share and six months later purchases the shares at $58.00 each.Ignoring brokerage fees, Nancy will

Accepted Answer

A)  earn a total profit of $112.50. 
B)  lose a total of $112.50. 
C)  earn a total profit of $1,112.50. 
D)  Lose a total of $101.25. 
A)  earn a total profit of $112.50. 
B)  lose a total of $112.50. 
C)  earn a total profit of $1,112.50. 
D)  Lose a total of $101.25.

Question 15

The governmental agency that oversees the capital markets is the

Accepted Answer

A)  Federal Trade Commission. 
B)  Federal Reserve. 
C)  Securities and Exchange Commission. 
D)  Fair Trade and Banking Agency. 
A)  Federal Trade Commission. 
B)  Federal Reserve. 
C)  Securities and Exchange Commission. 
D)  Fair Trade and Banking Agency.

Which one of the following statements about the NYSE is correct?

The Securities Act of 1933 deals mostly with primary markets.

Maintenance margin is the

Including foreign investments in a portfolio

The primary market for futures is the

An investment in which of the following represents an direct foreign investment? I.Global mutual fund II.U.S.multinational firm III.ADR IV.Foreign security

Which of the following practices is prohibited by the Insider Trading and Fraud Act of 1988.

Assume the foreign exchange rate for the euro was US $1.00 = .70 euro last month.This month, the exchange rate is US $1.00 = .72 euro.This information indicates that over the past month the

Describe the initial public offering (IPO)process and explain the role of the underwriter, the Securities and Exchange Commission (SEC), and the red herring.

Megan bought 200 shares of stock at a price of $10 a share.She used her 70% margin account to make the purchase.Megan sold her stock after a year for $12 a share.Ignoring margin interest and trading costs, what is Megan's return on investor's equity for this investment?

The NYSE has listing requirements that include a minimum I.number of outstanding shares. II.amount of pre-tax earnings. III.market value of publicly held shares. IV.number of shareholders owning 100 shares or more.

Investment bankers who join together to share the financial risk associated with buying an entire issue of new securities and reselling them to the public is called a(n)

Which of the following are associated with bear markets? I.investor pessimism II.rising profits III.economic slowdown IV.rising security prices

Amber sells short 100 shares of MNOP stock at $62.50 per share and six months later purchases the shares at $58.00 each.Ignoring brokerage fees, Nancy will

The governmental agency that oversees the capital markets is the

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

Which one of the following statements about the NYSE is correct?

The Securities Act of 1933 deals mostly with primary markets.

Maintenance margin is the

Including foreign investments in a portfolio

The primary market for futures is the

An investment in which of the following represents an direct foreign investment? I.Global mutual fund II.U.S.multinational firm III.ADR IV.Foreign security

Which of the following practices is prohibited by the Insider Trading and Fraud Act of 1988.

Assume the foreign exchange rate for the euro was US $1.00 = .70 euro last month.This month, the exchange rate is US $1.00 = .72 euro.This information indicates that over the past month the

Describe the initial public offering (IPO)process and explain the role of the underwriter, the Securities and Exchange Commission (SEC), and the red herring.

Megan bought 200 shares of stock at a price of $10 a share.She used her 70% margin account to make the purchase.Megan sold her stock after a year for $12 a share.Ignoring margin interest and trading costs, what is Megan's return on investor's equity for this investment?

The NYSE has listing requirements that include a minimum I.number of outstanding shares. II.amount of pre-tax earnings. III.market value of publicly held shares. IV.number of shareholders owning 100 shares or more.

Investment bankers who join together to share the financial risk associated with buying an entire issue of new securities and reselling them to the public is called a(n)

Which of the following are associated with bear markets? I.investor pessimism II.rising profits III.economic slowdown IV.rising security prices

Amber sells short 100 shares of MNOP stock at $62.50 per share and six months later purchases the shares at $58.00 each.Ignoring brokerage fees, Nancy will

The governmental agency that oversees the capital markets is the

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