Question 1

Firms that list their stock on an exchange can be delisted for failing to meet the requirements of the exchange.

Accepted Answer

A) True 
 B)False  True

Question 2

The price of stock sold in an IPO is set by bids submitted in the month before trading begins.

Accepted Answer

A) True 
 B)False  False

Question 3

Last week, Seward Company stock was selling at $66 a share when Ryan sold 300 shares of the stock short. Today Ryan bought 300 shares of the same stock at a price of $70.00 share to cover his position. Ignoring trading costs, what is the dollar return on Ryan's investment?

Accepted Answer

A)  $1,200 
B)  -$400 
C)  $400 
D)  $-1,200 
A)  $1,200 
B)  -$400 
C)  $400 
D)  $-1,200 D

Question 4

The automated system for trading highly active OTC securities is the

Accepted Answer

A)  Big Board. 
B)  Kansas City Board. 
C)  Chicago Board of Trade. 
D)  NASDAQ. 
A)  Big Board. 
B)  Kansas City Board. 
C)  Chicago Board of Trade. 
D)  NASDAQ.

Question 5

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 6

Including foreign investments in a portfolio

Accepted Answer

A)  increases the overall risk 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)  increases the overall risk 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 7

The purpose of the "quiet period"a company must observe from the time it files a registration statement with the SEC until after an IPO is complete is to assure that all investors receive the same information.

Accepted Answer

A) True 
 B)False

Question 8

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 9

It can be argued that an IPO was overpriced when the IPO produces extraordinarily high rates of return on its first day of trading.

Accepted Answer

A) True 
 B)False

Question 10

The Sarbanes-Oxley Act of 2002 strengthens accounting disclosure requirements and ethical guidelines for financial officers.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 13

Gerry bought 100 shares of stock for $30.00 per share on 70% margin. Assume Gerry holds the stock for one year and that his interest costs will be $45 over the holding period. Gerry also received dividends amounting to $0.30 per share. Ignoring commissions, what is his percentage return on invested capital if he sells the stock for $34 a share?

Accepted Answer

A)  106.17% 
B)  20.48% 
C)  18.33 
D)  9.16% 
A)  106.17% 
B)  20.48% 
C)  18.33 
D)  9.16%

Question 14

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 15

Emily bought 200 shares of ABC Co. stock for $29.00 per share on 60% margin. Assume she holds the stock for one year and that her interest costs will be $80 over the holding period. Ignoring commissions, what is her percentage return (loss) on invested capital if the stock price went down 10%?

Accepted Answer

A)  -32% 
B)  -21% 
C)  -16% 
D)  -10% 
A)  -32% 
B)  -21% 
C)  -16% 
D)  -10%

Question 16

The majority of bonds trade in the OTC market.

Accepted Answer

A) True 
 B)False

Question 17

Kayla invested $3,000 and purchased shares of a German corporation when the exchange rate was $1.00 = .70 euro. After six months, she sold all of the shares for 3,180 euros, when the exchange rate was $1.00 = .68 euro. No dividends were paid during the time Heidi owned the shares of stock. What is the amount of Kayla's gain or loss on this investment?

Accepted Answer

A)  $129.60 gain 
B)  $1676 gain 
C)  $1676 loss 
D)  $250 loss 
A)  $129.60 gain 
B)  $1676 gain 
C)  $1676 loss 
D)  $250 loss

Question 18

Which of the following are functions of the secondary market?
I. Provide liquidity for current stockholders.
II. Equate the demand and supply of securities.
III. Provide a market for the dale of new stock by companies that are already public.
IV. Provide continuous pricing of securities.

Accepted Answer

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

Question 19

The purpose of the Intermarket Trading System is to link major exchanges and dealer markets to

Accepted Answer

A)  eliminate competition between brokers and dealers. 
B)  allow brokers and dealers to make transactions at the best price. 
C)  allow individual to compare the prices offered by various dealers and brokers. 
D)  allow individual investors to traded directly with each other. 
A)  eliminate competition between brokers and dealers. 
B)  allow brokers and dealers to make transactions at the best price. 
C)  allow individual to compare the prices offered by various dealers and brokers. 
D)  allow individual investors to traded directly with each other.

Question 20

The Sarbanes-Oxley Act of 2002 focuses on

Accepted Answer

A)  insider trading. 
B)  IPOs. 
C)  accounting and other public disclosures of information. 
D)  regulation of the OTC markets. 
A)  insider trading. 
B)  IPOs. 
C)  accounting and other public disclosures of information. 
D)  regulation of the OTC markets.

Firms that list their stock on an exchange can be delisted for failing to meet the requirements of the exchange.

The price of stock sold in an IPO is set by bids submitted in the month before trading begins.

Last week, Seward Company stock was selling at $66 a share when Ryan sold 300 shares of the stock short. Today Ryan bought 300 shares of the same stock at a price of $70.00 share to cover his position. Ignoring trading costs, what is the dollar return on Ryan's investment?

The automated system for trading highly active OTC securities is the

The Securities Exchange Act of 1934

Including foreign investments in a portfolio

The purpose of the "quiet period"a company must observe from the time it files a registration statement with the SEC until after an IPO is complete is to assure that all investors receive the same information.

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

It can be argued that an IPO was overpriced when the IPO produces extraordinarily high rates of return on its first day of trading.

The Sarbanes-Oxley Act of 2002 strengthens accounting disclosure requirements and ethical guidelines for financial officers.

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

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

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

Emily bought 200 shares of ABC Co. stock for $29.00 per share on 60% margin. Assume she holds the stock for one year and that her interest costs will be $80 over the holding period. Ignoring commissions, what is her percentage return (loss) on invested capital if the stock price went down 10%?

The majority of bonds trade in the OTC market.

Which of the following are functions of the secondary market? I. Provide liquidity for current stockholders. II. Equate the demand and supply of securities. III. Provide a market for the dale of new stock by companies that are already public. IV. Provide continuous pricing of securities.

The purpose of the Intermarket Trading System is to link major exchanges and dealer markets to

The Sarbanes-Oxley Act of 2002 focuses on

The Investment Environment

Investment Information and Securities 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 2: Securities Markets and Transactions

Firms that list their stock on an exchange can be delisted for failing to meet the requirements of the exchange.

The price of stock sold in an IPO is set by bids submitted in the month before trading begins.

Last week, Seward Company stock was selling at $66 a share when Ryan sold 300 shares of the stock short. Today Ryan bought 300 shares of the same stock at a price of $70.00 share to cover his position. Ignoring trading costs, what is the dollar return on Ryan's investment?

The automated system for trading highly active OTC securities is the

The Securities Exchange Act of 1934

Including foreign investments in a portfolio

The purpose of the "quiet period"a company must observe from the time it files a registration statement with the SEC until after an IPO is complete is to assure that all investors receive the same information.

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

It can be argued that an IPO was overpriced when the IPO produces extraordinarily high rates of return on its first day of trading.

The Sarbanes-Oxley Act of 2002 strengthens accounting disclosure requirements and ethical guidelines for financial officers.

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

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

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

Emily bought 200 shares of ABC Co. stock for $29.00 per share on 60% margin. Assume she holds the stock for one year and that her interest costs will be $80 over the holding period. Ignoring commissions, what is her percentage return (loss) on invested capital if the stock price went down 10%?

The majority of bonds trade in the OTC market.

Which of the following are functions of the secondary market? I. Provide liquidity for current stockholders. II. Equate the demand and supply of securities. III. Provide a market for the dale of new stock by companies that are already public. IV. Provide continuous pricing of securities.

The purpose of the Intermarket Trading System is to link major exchanges and dealer markets to

The Sarbanes-Oxley Act of 2002 focuses on

The Investment Environment

Investment Information and Securities 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