Question 1

Advantages of a full-service brokerage include

Accepted Answer

A)  faster execution of trades. 
B)  lower commissions on most trades. 
C)  access to advice and research reports. 
D)  the ability to place limit and stop-loss orders. 
A)  faster execution of trades. 
B)  lower commissions on most trades. 
C)  access to advice and research reports. 
D)  the ability to place limit and stop-loss orders.

Question 2

Investment advisors are legally responsible for losses incurred by their clients.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following is a measure of the performance of small companies?

Accepted Answer

A)  Russell 2000 
B)  Russell 1000 
C)  Russell 3000 
D)  Value Line 1700 
A)  Russell 2000 
B)  Russell 1000 
C)  Russell 3000 
D)  Value Line 1700

Question 4

Averages and indexes differ from one another in that an index

Accepted Answer

A)  is the arithmetic average price behavior of a group of stocks at a given point in time. 
B)  measures the current price behavior of a group of stocks in relation to a base value set at an earlier point in time. 
C)  is of value in-and-of itself, whereas an average must be compared to a historical figure to have any meaning. 
D)  always moves up before a corresponding average moves up, and always moves down before a corresponding average moves down. 
A)  is the arithmetic average price behavior of a group of stocks at a given point in time. 
B)  measures the current price behavior of a group of stocks in relation to a base value set at an earlier point in time. 
C)  is of value in-and-of itself, whereas an average must be compared to a historical figure to have any meaning. 
D)  always moves up before a corresponding average moves up, and always moves down before a corresponding average moves down.

Question 5

A person can become a Certified Financial Planner merely by filling out an application and paying an annual fee.

Accepted Answer

A) True 
 B)False

Question 6

An individual investor who wishes to borrow money to buy stocks must open a

Accepted Answer

A)  signature account. 
B)  margin account. 
C)  joint account. 
D)  custodial account. 
A)  signature account. 
B)  margin account. 
C)  joint account. 
D)  custodial account.

Question 7

Shares of stock owned by an individual but held in a brokerage firm's name for ease of trading are said to be held in street name.

Accepted Answer

A) True 
 B)False

Question 8

If the market moves rapidly, an on-line trader may experience difficulty placing a trade.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following indexes is the most comprehensive measure of financial market performance?

Accepted Answer

A)  NYSE composite 
B)  DJIA 
C)  Wilshire 5000 
D)  Value Line composite 
A)  NYSE composite 
B)  DJIA 
C)  Wilshire 5000 
D)  Value Line composite

Question 10

Which one of the following statements is true concerning bonds?

Accepted Answer

A)  A bond yield represents only the interest earned on a bond. 
B)  Bond yield data is more useful to an investor when compared over time. 
C)  A bond's yield remains constant even when a bond is sold prior to maturity. 
D)  Bonds with similar characteristics generally have widely disparate bond yields. 
A)  A bond yield represents only the interest earned on a bond. 
B)  Bond yield data is more useful to an investor when compared over time. 
C)  A bond's yield remains constant even when a bond is sold prior to maturity. 
D)  Bonds with similar characteristics generally have widely disparate bond yields.

Question 11

In addition to the Dow Jones Industrial Average, there are Dow Jones Averages for transportation and bond prices.

Accepted Answer

A) True 
 B)False

Question 12

Many day traders are also margin traders.

Accepted Answer

A) True 
 B)False

Question 13

On-line trading has greatly lowered greatly lowered the cost of buying and selling stock as well as greatly increasing the speed of transactions.

Accepted Answer

A) True 
 B)False

Question 14

McDonald's stock is now selling for $92 per share. Kim wants to buy 100 shares but only if she can do so at $90 or less. She should place a(n)

Accepted Answer

A)  stop order. 
B)  market order. 
C)  limit order. 
D)  odd-lot order. 
A)  stop order. 
B)  market order. 
C)  limit order. 
D)  odd-lot order.

Question 15

Which one of the following statements is correct?

Accepted Answer

A)  The S&P 500 Index is based on 500 large companies that trade on U.S. exchanges. 
B)  Because of mergers and bankruptcies, the S&P 500 Index no longer contains 500 stocks. 
C)  The S&P 500 Index is carefully constructed to reflect the values of large, medium and small capitalization companies. 
D)  The S&P 500 is based on the 500 largest U.S. companies as measured by market value. 
A)  The S&P 500 Index is based on 500 large companies that trade on U.S. exchanges. 
B)  Because of mergers and bankruptcies, the S&P 500 Index no longer contains 500 stocks. 
C)  The S&P 500 Index is carefully constructed to reflect the values of large, medium and small capitalization companies. 
D)  The S&P 500 is based on the 500 largest U.S. companies as measured by market value.

Question 16

All the Standard & Poor's indexes are based on the total market values of the companies rather than on the price of a single share.

Accepted Answer

A) True 
 B)False

Question 17

A fill-or-kill order will be

Accepted Answer

A)  executed immediately upon order arrival on the floor of the exchange. 
B)  will be cancelled if not immediately executed at the stated price or better. 
C)  will be cancelled at the end of the trading day if not executed by that time. 
D)  in effect until cancelled by the customer who placed the order. 
A)  executed immediately upon order arrival on the floor of the exchange. 
B)  will be cancelled if not immediately executed at the stated price or better. 
C)  will be cancelled at the end of the trading day if not executed by that time. 
D)  in effect until cancelled by the customer who placed the order.

Question 18

Which one of the following statements is correct about a good-'til-cancelled order?

Accepted Answer

A)  The order generally expires after six weeks. 
B)  The order will automatically renew unless cancelled by the customer. 
C)  The order helps customers obtain a specific price without watching the market continuously. 
D)  The order will be cancelled at the end of the trading day if not executed. 
A)  The order generally expires after six weeks. 
B)  The order will automatically renew unless cancelled by the customer. 
C)  The order helps customers obtain a specific price without watching the market continuously. 
D)  The order will be cancelled at the end of the trading day if not executed.

Question 19

Unless the investor has requested another arrangement, cash from dividends and the sale of stock is normally

Accepted Answer

A)  deposited in a Money Market Account offered by the brokerage. 
B)  automatically reinvested in more stock. 
C)  direct deposited to the investor's bank account. 
D)  held in escrow by the brokerage until it is be reinvested. 
A)  deposited in a Money Market Account offered by the brokerage. 
B)  automatically reinvested in more stock. 
C)  direct deposited to the investor's bank account. 
D)  held in escrow by the brokerage until it is be reinvested.

Question 20

Which one of the following statements about back-office research reports is FALSE?

Accepted Answer

A)  They frequently include buy or sell recommendations. 
B)  They include analyses of current and future prospects for the securities markets. 
C)  They look at specific companies as well as industries. 
D)  They are only available to high-profile clients who maintain large accounts with the brokerage firm. 
A)  They frequently include buy or sell recommendations. 
B)  They include analyses of current and future prospects for the securities markets. 
C)  They look at specific companies as well as industries. 
D)  They are only available to high-profile clients who maintain large accounts with the brokerage firm.

Advantages of a full-service brokerage include

Investment advisors are legally responsible for losses incurred by their clients.

Which one of the following is a measure of the performance of small companies?

Averages and indexes differ from one another in that an index

A person can become a Certified Financial Planner merely by filling out an application and paying an annual fee.

An individual investor who wishes to borrow money to buy stocks must open a

Shares of stock owned by an individual but held in a brokerage firm's name for ease of trading are said to be held in street name.

If the market moves rapidly, an on-line trader may experience difficulty placing a trade.

Which one of the following indexes is the most comprehensive measure of financial market performance?

Which one of the following statements is true concerning bonds?

In addition to the Dow Jones Industrial Average, there are Dow Jones Averages for transportation and bond prices.

Many day traders are also margin traders.

On-line trading has greatly lowered greatly lowered the cost of buying and selling stock as well as greatly increasing the speed of transactions.

McDonald's stock is now selling for $92 per share. Kim wants to buy 100 shares but only if she can do so at $90 or less. She should place a(n)

Which one of the following statements is correct?

All the Standard & Poor's indexes are based on the total market values of the companies rather than on the price of a single share.

A fill-or-kill order will be

Which one of the following statements is correct about a good-'til-cancelled order?

Unless the investor has requested another arrangement, cash from dividends and the sale of stock is normally

Which one of the following statements about back-office research reports is FALSE?

The Investment Environment

Securities Markets and Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters

Exam 3: Investment Information and Securities Transactions

Advantages of a full-service brokerage include

Investment advisors are legally responsible for losses incurred by their clients.

Which one of the following is a measure of the performance of small companies?

Averages and indexes differ from one another in that an index

A person can become a Certified Financial Planner merely by filling out an application and paying an annual fee.

An individual investor who wishes to borrow money to buy stocks must open a

Shares of stock owned by an individual but held in a brokerage firm's name for ease of trading are said to be held in street name.

If the market moves rapidly, an on-line trader may experience difficulty placing a trade.

Which one of the following indexes is the most comprehensive measure of financial market performance?

Which one of the following statements is true concerning bonds?

In addition to the Dow Jones Industrial Average, there are Dow Jones Averages for transportation and bond prices.

Many day traders are also margin traders.

On-line trading has greatly lowered greatly lowered the cost of buying and selling stock as well as greatly increasing the speed of transactions.

McDonald's stock is now selling for $92 per share. Kim wants to buy 100 shares but only if she can do so at $90 or less. She should place a(n)

Which one of the following statements is correct?

All the Standard & Poor's indexes are based on the total market values of the companies rather than on the price of a single share.

A fill-or-kill order will be

Which one of the following statements is correct about a good-'til-cancelled order?

Unless the investor has requested another arrangement, cash from dividends and the sale of stock is normally

Which one of the following statements about back-office research reports is FALSE?

The Investment Environment

Securities Markets and Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters