Question 1

Which of the following acts abolished fixed commission schedules?

Accepted Answer

A)  Investment Advisers Act of 1940 
B)  Investment Company Act of 1940 
C)  Securities Acts Amendments of 1975 
D)  Insider Trading and Fraud Act of 1988 
A)  Investment Advisers Act of 1940 
B)  Investment Company Act of 1940 
C)  Securities Acts Amendments of 1975 
D)  Insider Trading and Fraud Act of 1988

Question 2

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 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

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 5

The financial crisis of 2008 resulted in a sharp reduction in the number of initial public offerings because

Accepted Answer

A)  investors lacked confidence in future market conditions. 
B)  the crisis led to new regulations which were not yet fully understood. 
C)  investors were wary of new companies with no sustained record of profitability. 
D)  all of the above. 
A)  investors lacked confidence in future market conditions. 
B)  the crisis led to new regulations which were not yet fully understood. 
C)  investors were wary of new companies with no sustained record of profitability. 
D)  all of the above.

Question 6

The financial markets are becoming more globally integrated.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

The linking of global markets has progressed to the point where electronic order matching for stocks of large international companies is now possible 24 hours a day.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Primary markets deal in the stocks of larger, well-known companies; secondary markets deal in the stocks of smaller, less well-known companies.

Accepted Answer

A) True 
 B)False

Question 12

Jocelyn sells short 100 0 shares of JKLO stock at $31.25 per share and six months later purchases the shares at $29.00 each. Ignoring brokerage fees, Nancy will

Accepted Answer

A)  earn a total profit of $3,125. 
B)  lose a total of $2,900. 
C)  earn a total profit of $2,250. 
D)  Lose a total of $2,250. 
A)  earn a total profit of $3,125. 
B)  lose a total of $2,900. 
C)  earn a total profit of $2,250. 
D)  Lose a total of $2,250.

Question 13

Insider trading is the use of nonpublic information about a security to gain a profit.

Accepted Answer

A) True 
 B)False

Question 14

Exchange traded funds are

Accepted Answer

A)  mutual funds that trade on the Big Board. 
B)  baskets of securities that trade like a single stock. 
C)  index funds that trade on the NYSE. 
D)  groups of securities that trade only on regional exchanges. 
A)  mutual funds that trade on the Big Board. 
B)  baskets of securities that trade like a single stock. 
C)  index funds that trade on the NYSE. 
D)  groups of securities that trade only on regional exchanges.

Question 15

Large technology companies such as IBM and Microsoft trade

Accepted Answer

A)  exclusively on the NASDAQ. 
B)  exclusively on the NYSE. 
C)  on either the NASDAQ or the NYSE. 
D)  exclusively on alternative trading systems. 
A)  exclusively on the NASDAQ. 
B)  exclusively on the NYSE. 
C)  on either the NASDAQ or the NYSE. 
D)  exclusively on alternative trading systems.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The dominant options exchange is the

Accepted Answer

A)  Chicago Board Options Exchange. 
B)  American Stock Exchange. 
C)  Pacific Stock Exchange. 
D)  Philadelphia Options Exchange. 
A)  Chicago Board Options Exchange. 
B)  American Stock Exchange. 
C)  Pacific Stock Exchange. 
D)  Philadelphia Options Exchange.

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

Federal securities laws are designed to protect financial institutions.

Accepted Answer

A) True 
 B)False

Question 20

If an investor does not respond to a margin call, the broker will

Accepted Answer

A)  sell enough of the investor's holdings that the margin account can be closed. 
B)  sell some of the investor's holdings to cover the margin call. 
C)  notify the Federal Reserve so they can cover the call. 
D)  sell all of the investor's holdings and close their brokerage account. 
A)  sell enough of the investor's holdings that the margin account can be closed. 
B)  sell some of the investor's holdings to cover the margin call. 
C)  notify the Federal Reserve so they can cover the call. 
D)  sell all of the investor's holdings and close their brokerage account.

Which of the following acts abolished fixed commission schedules?

The primary market for futures is the

Maintenance margin is the

Stocks and bonds are traded in

The financial crisis of 2008 resulted in a sharp reduction in the number of initial public offerings because

The financial markets are becoming more globally integrated.

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

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

The linking of global markets has progressed to the point where electronic order matching for stocks of large international companies is now possible 24 hours a day.

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

Primary markets deal in the stocks of larger, well-known companies; secondary markets deal in the stocks of smaller, less well-known companies.

Jocelyn sells short 100 0 shares of JKLO stock at $31.25 per share and six months later purchases the shares at $29.00 each. Ignoring brokerage fees, Nancy will

Insider trading is the use of nonpublic information about a security to gain a profit.

Exchange traded funds are

Large technology companies such as IBM and Microsoft trade

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

The dominant options exchange is the

Federal securities laws are designed to protect financial institutions.

If an investor does not respond to a margin call, the broker will

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

Which of the following acts abolished fixed commission schedules?

The primary market for futures is the

Maintenance margin is the

Stocks and bonds are traded in

The financial crisis of 2008 resulted in a sharp reduction in the number of initial public offerings because

The financial markets are becoming more globally integrated.

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

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

The linking of global markets has progressed to the point where electronic order matching for stocks of large international companies is now possible 24 hours a day.

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

Primary markets deal in the stocks of larger, well-known companies; secondary markets deal in the stocks of smaller, less well-known companies.

Jocelyn sells short 100 0 shares of JKLO stock at $31.25 per share and six months later purchases the shares at $29.00 each. Ignoring brokerage fees, Nancy will

Insider trading is the use of nonpublic information about a security to gain a profit.

Exchange traded funds are

Large technology companies such as IBM and Microsoft trade

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

The dominant options exchange is the

Federal securities laws are designed to protect financial institutions.

If an investor does not respond to a margin call, the broker will

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