Question 1

The Securities Investor Protection Corporation insures individual investors against

Accepted Answer

A)  the loss of up to $500,000 in securities or $100,000 in cash held by a broker. 
B)  market losses of $500,000 total or $100,000 per transaction. 
C)  losses of up to $100,000 incurred due to innocent online trading errors. 
D)  losses incurred up to $500,000 due to churning by a broker. 
A)  the loss of up to $500,000 in securities or $100,000 in cash held by a broker. 
B)  market losses of $500,000 total or $100,000 per transaction. 
C)  losses of up to $100,000 incurred due to innocent online trading errors. 
D)  losses incurred up to $500,000 due to churning by a broker.

Question 2

Which one of the following statements is correct?

Accepted Answer

A)  The DJIA is comprised of 50 stocks. 
B)  The Dow Jones 65 Stocks Composite Average is comprised solely of technology stocks. 
C)  The Dow Jones U.S. Total Market Index is a market-weighted index. 
D)  The Dow Jones Transportation Average is based solely on freight line stocks. 
A)  The DJIA is comprised of 50 stocks. 
B)  The Dow Jones 65 Stocks Composite Average is comprised solely of technology stocks. 
C)  The Dow Jones U.S. Total Market Index is a market-weighted index. 
D)  The Dow Jones Transportation Average is based solely on freight line stocks.

Question 3

It is generally a good idea to use limit orders when purchasing IPOs on-line.

Accepted Answer

A) True 
 B)False

Question 4

Most on-line brokers execute their own trades on the floor of the New York Stock Exchange.

Accepted Answer

A) True 
 B)False

Question 5

An individual can sort stocks by dividend rates, growth rates, and price/earnings ratios using screening tools on the Internet.

Accepted Answer

A) True 
 B)False

Question 6

Mike bought 200 shares of EG stock two years ago at $16 per share.The stock has traded in a range of $21 to $44 a share over the past year.EG is now selling for $43.60 a share.EG announces its earnings today and Mike feels the stock could go to $60 on good news or fall to $30 on bad.To protect his profits, the most appropriate order for him to place is

Accepted Answer

A)  market order to sell immediately. 
B)  a limit sell order at $60.00. 
C)  a stop loss order at $42. 
D)  a stop-limit order to sell at $45. 
A)  market order to sell immediately. 
B)  a limit sell order at $60.00. 
C)  a stop loss order at $42. 
D)  a stop-limit order to sell at $45.

Question 7

Which one of the following web sites does NOT offer bond ratings?

Accepted Answer

A)  Standard & Poor's 
B)  Fitch 
C)  Mergent's Manuals 
D)  Financial Times 
A)  Standard & Poor's 
B)  Fitch 
C)  Mergent's Manuals 
D)  Financial Times

Question 8

The documents signed when a customer opens a brokerage account

Accepted Answer

A)  serve as an informal relationship between the customer and the stockbroker. 
B)  limit the customer to dealing only through that brokerage firm. 
C)  may be signed by a minor child provided that the money being invested belongs to the child. 
D)  establish a legal relationship between the customer and the brokerage firm. 
A)  serve as an informal relationship between the customer and the stockbroker. 
B)  limit the customer to dealing only through that brokerage firm. 
C)  may be signed by a minor child provided that the money being invested belongs to the child. 
D)  establish a legal relationship between the customer and the brokerage firm.

Question 9

Ryan places a good-'til-canceled limit order to sell 300 shares of KM at $18 a share.When his order reaches the trading floor, KM is trading at $18.20.Which of the following statements is true concerning Roy's order?

Accepted Answer

A)  The trade will not be executed and will be immediately cancelled. 
B)  The specialist will record the order in the order book and execute the trade as soon as the price hits $18.00. 
C)  The brokerage firm will sell the 300 shares at $18.20 and keep the additional $0.20 as a commission. 
D)  The order will be executed at $18.20 with the proceeds credited to Roy's account. 
A)  The trade will not be executed and will be immediately cancelled. 
B)  The specialist will record the order in the order book and execute the trade as soon as the price hits $18.00. 
C)  The brokerage firm will sell the 300 shares at $18.20 and keep the additional $0.20 as a commission. 
D)  The order will be executed at $18.20 with the proceeds credited to Roy's account.

Question 10

Whose responsibility is it to determine if a client can pay for the securities they purchase?

Accepted Answer

A)  the stockbroker who opens the account for the client 
B)  the floor broker who places the trade on the floor of the exchange 
C)  the dealer who acts as the seller in the trade 
D)  the broker in charge of churning 
A)  the stockbroker who opens the account for the client 
B)  the floor broker who places the trade on the floor of the exchange 
C)  the dealer who acts as the seller in the trade 
D)  the broker in charge of churning

Question 11

Earnings on securities held in street name by the brokerage are not reported to the Internal Revenue Service.

Accepted Answer

A) True 
 B)False

Question 12

Investors who are aware of current economic, political, and market events tend to make better investment decisions.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements about the Dow Jones Industrial Average are correct?
I.Higher-priced stocks tend to affect the average more than lower-priced stocks.
II.A one-point change in the DJIA correlates to a $1 change in average share value.
III.Changes in the DJIA are made to reflect company mergers and acquisitions.
IV.The DJIA divisor was determined when the average was created and remains constant.

Accepted Answer

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

Question 14

Which one of the following is the LEAST important when selecting a stockbroker?

Accepted Answer

A)  knowing the stockbroker personally 
B)  selecting a stockbroker who best understands your investment goals 
C)  considering the services offered and the related costs 
D)  getting referrals from personal acquaintances with similar investment objectives 
A)  knowing the stockbroker personally 
B)  selecting a stockbroker who best understands your investment goals 
C)  considering the services offered and the related costs 
D)  getting referrals from personal acquaintances with similar investment objectives

Question 15

An informal, voluntary agreement to solve disputes between an investor and his/her broker by utilizing a person to facilitate negotiations between the two parties is called

Accepted Answer

A)  voluntary arbitration. 
B)  binding arbitration. 
C)  mediation. 
D)  litigation. 
A)  voluntary arbitration. 
B)  binding arbitration. 
C)  mediation. 
D)  litigation.

Question 16

Individuals can use the Internet to
I.analyze individual securities.
II.search for stocks that meet specific investment criteria.
III.organize their financial information.
IV.track the performance of their portfolio.

Accepted Answer

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

Question 17

Brokerage firms are not allowed to make specific buy or sell recommendations to their clients.

Accepted Answer

A) True 
 B)False

Question 18

Commission structures vary with the type of security being traded, the type of broker involved and the size of the order.

Accepted Answer

A) True 
 B)False

Question 19

Both the Dow Jones Industrial Average and the Standard and Poors 500 Index are constructed to reflect the value of shares in large, mid-size and smaller companies.

Accepted Answer

A) True 
 B)False

Question 20

Investment clubs are legal partnerships.

Accepted Answer

A) True 
 B)False

The Securities Investor Protection Corporation insures individual investors against

Which one of the following statements is correct?

It is generally a good idea to use limit orders when purchasing IPOs on-line.

Most on-line brokers execute their own trades on the floor of the New York Stock Exchange.

An individual can sort stocks by dividend rates, growth rates, and price/earnings ratios using screening tools on the Internet.

Which one of the following web sites does NOT offer bond ratings?

The documents signed when a customer opens a brokerage account

Ryan places a good-'til-canceled limit order to sell 300 shares of KM at $18 a share.When his order reaches the trading floor, KM is trading at $18.20.Which of the following statements is true concerning Roy's order?

Whose responsibility is it to determine if a client can pay for the securities they purchase?

Earnings on securities held in street name by the brokerage are not reported to the Internal Revenue Service.

Investors who are aware of current economic, political, and market events tend to make better investment decisions.

Which one of the following is the LEAST important when selecting a stockbroker?

An informal, voluntary agreement to solve disputes between an investor and his/her broker by utilizing a person to facilitate negotiations between the two parties is called

Individuals can use the Internet to I.analyze individual securities. II.search for stocks that meet specific investment criteria. III.organize their financial information. IV.track the performance of their portfolio.

Brokerage firms are not allowed to make specific buy or sell recommendations to their clients.

Commission structures vary with the type of security being traded, the type of broker involved and the size of the order.

Both the Dow Jones Industrial Average and the Standard and Poors 500 Index are constructed to reflect the value of shares in large, mid-size and smaller companies.

Investment clubs are legal partnerships.

The Investment Environment

Securities Markets and 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 3: Investment Information and Securities Transactions

The Securities Investor Protection Corporation insures individual investors against

Which one of the following statements is correct?

It is generally a good idea to use limit orders when purchasing IPOs on-line.

Most on-line brokers execute their own trades on the floor of the New York Stock Exchange.

An individual can sort stocks by dividend rates, growth rates, and price/earnings ratios using screening tools on the Internet.

Which one of the following web sites does NOT offer bond ratings?

The documents signed when a customer opens a brokerage account

Ryan places a good-'til-canceled limit order to sell 300 shares of KM at $18 a share.When his order reaches the trading floor, KM is trading at $18.20.Which of the following statements is true concerning Roy's order?

Whose responsibility is it to determine if a client can pay for the securities they purchase?

Earnings on securities held in street name by the brokerage are not reported to the Internal Revenue Service.

Investors who are aware of current economic, political, and market events tend to make better investment decisions.

Which one of the following is the LEAST important when selecting a stockbroker?

An informal, voluntary agreement to solve disputes between an investor and his/her broker by utilizing a person to facilitate negotiations between the two parties is called

Individuals can use the Internet to I.analyze individual securities. II.search for stocks that meet specific investment criteria. III.organize their financial information. IV.track the performance of their portfolio.

Brokerage firms are not allowed to make specific buy or sell recommendations to their clients.

Commission structures vary with the type of security being traded, the type of broker involved and the size of the order.

Both the Dow Jones Industrial Average and the Standard and Poors 500 Index are constructed to reflect the value of shares in large, mid-size and smaller companies.

Investment clubs are legal partnerships.

The Investment Environment

Securities Markets and 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